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C.OEHUGHT DSPCSrt 



EXECUTIVE COUNCIL 

OF 

Cbe national Civic federation 

33rd Floor Metropolitan Tower, 
New York City 



ALTON B. PARKER, President. 

SAMUEL GOMPERS, Vice-President. 

CHARLES S. BARRETT, Vice-President. 

V. EVERIT MACY, Treasurer. 

RALPH M. EASLEY, Chairman Executive Council. 

JOHN HAYS HAMMOND, 

Chairman Department Regulation of Industrial Corporations. 

WILLIAM JAY SCHIEFFELIN, 

Chairman Committee on National Defense. 

LOUIS A. COOLIDGE, 

Chairman Welfare Department. 

FRANCIS R. MAYER, 

Chairman Industrial Training Department. 

MISS MAUDE WETMORE, 

Chairman Woman s Department. 

LOUIS B. SCHRAM, 

Chairman Industrial Accidents Prevention Department. 

AUGUST BELMONT, 

Chairman Workmen's Compensation Department. 

WARREN S. STONE, 

Chairman Social Insurance Department. 

EMERSON McMILLIN, 

Chairman Department Regulation of Public Utilities. 

GEORGE W. PERKINS, 

Chairman Department on Profit Sharing. 

VINCENT ASTOR, 

Chairman Food and Drugs Department. 

JEREMIAH W. JENKS, 

Chairman Department on Industrial Mediation. 

TALCOTT WILLIAMS, 

Chairman Industrial Economics Department. 

WILLIAM R. WILLCOX, 

Chairman Department on Pensions. 

A. J. PORTER, Chairman Minimum Wage Commission. 

GERTRUDE BEEKS EASLEY, 

Secretary Executive Council. 

D. L. CEASE, Secretary The National Civic Federation. 









\* 



Copyright 1916 

Gertbude Beeks 

Director Welfare Department 

Copyright 1920 

Gertrude Beeks Easley 

Secretary Profit Sharing Department 

The National Civic Federation 
New York 



V 



20 



CI.A571188 



CONTENTS 



PAGE 
Introduction ........ 1 

Profit Sharing; or, The Worker's Fair Share. 

Address by George W. Perkins .... 8 

Definition of Profit Sharing . . . . .22 

Percentage of Profits ...... 24 

Special Distribution. ...... 74 

Exceptional Plans ....... 266 

Production Bonus ....... 188 

Stock Ownership Plans ...... 198 

Reported in the Press, New Year, 1920 . . . 304 

Abandoned Plans . . . . . . .310 

Proposed Plans ....... 345 

Practice and Theory . . . . . .351 

The "Road Toward Industrial Peace." 

Dr. Charles W. Eliot .... . 362 

Wage-Earners' Stock Investments. 

(From an article on the Democratization of Industry) 
Ralph M. Easley . . . . . . 366 

368 
382 
392 

404 
414 



Attitude of the Trade Unions 
Some French Types . 
Experience in England . 
Profit Sharing; Trade Unionism 

J. W. Sullivan . 
Index . . 



Labor Co-Partnership. 



y 



INTRODUCTION. 

In 1916, The National Civic Federation published the 
first edition of this work. Its preparation required a laborious 
investigation, followed by analyses of more than two hundred 
plans by which in this country payments beyond regular wages 
were being made to wage-earners. A constant aim in the in- 
quiry was an accurate and unbiased statement of facts. The 
resultant material was published with the intention of meeting 
a demand, especially from managers of manufacturing estab- 
lishments, for testimony as to wherein and why profit sharing 
had been successful or unsuccessful. 

The entire edition of the volume issued was soon ex- 
hausted, and there has been an unsatisfied call for it ever 
since. A new edition has therefore been prepared, with 
numerous additions. In fact the present is not so much a 
revised edition as it is a new book. Most of the contents is 
new. Plan and arrangement have been changed. At least 
half the pages of the 1916 edition have been omitted, while 
the added new matter amounts to double or triple the pages 
canceled. 

The book is one for to-day and of to-day. Its facts have 
been contributed by men active in the affairs of to-day. In its 
pages, a man known, by name and by reason of his sociolog- 
ical views, to all the others joining in the discussion through 
their written statements, presents before the country the prin- 
ciples of an industrial project which he believes helpful to 
labor as well as capital. In reply comes from far and wide 
testimony for and against that project, a fact which at least 
proves a widespread lively interest in it as a topic of the day. 
Reading the statements of fact and opinion thus educed one 
becomes a spectator in a forum in the discussions of which 
each speaker, giving his name, comes out into the open and 
relates his experiences with his own or his company's plan. 
He tells of his hopes and expectations and finally offers his 
judgment as to the weaknesses or points of strength in the 
methods he, as a closely interested observer, has seen tried. 
Some contributors are enthusiastic over their successes; some 



2 THE NATIONAL CIVIC FEDERATION 

are resigned to having their plans work passably well; others 
are uncertain as to the outcome, and still others have frankly 
abandoned plan and principle. But all bring to the general 
attention the practical side of the question. They exhibit 
actual experiments now going on in business and industrial 
life. 

There is no worked-over library goods in these pages. 
Every paragraph relates to present activities in the production 
of material things affecting human existence. The testimony, 
mostly from managers of companies and wage-workers' 
spokesmen, has direct relation to an important phase of the 
big labor problem. The inquiry common to all is the shortest 
and best cut to certain practical objectives. The results de- 
sired are maximum production with minimum waste, in- 
creased satisfaction to both employers and employees, steps 
in the activities of trade and manufacture toward a more 
highly civilized society. 

Statements of specific plans have been furnished as a rule 
by the leading men of the firms or companies concerned. 
Little or no dependence has been placed on second-hand infor- 
mation. It is, therefore, a certainty that the statements on 
Lehalf of the employers are not only reliable but the best 
obtainable. As to the views of the employees affected, espe- 
cially those of the masses of the lowest paid workers, author- 
ized expression is impossible, since profit sharing undertak- 
ings are nearly all carried on by employers of unorganized 
labor. On behalf of the trade unions, their spokesmen have 
presented their dissection of the general principle of profit 
sharing rather than an analysis of the plan of any particular 
establishment. Organized labor's representatives are unani- 
mous in opposing the general theory and practice of profit 
sharing, as is seen by the statements in the chapter "Attitude 
of Trade Unionists." Whether their hostile attitude is in any 
measure shared by the mass of unorganized workers is an 
unanswered question. But it cannot be assumed that the 
latter would have much interest in the reasons urged against 
it by organized workers. 

As to the value of profit sharing experiments, the follow- 
ing paragraphs from the introduction of our 1916 edition 
can here be pertinently reproduced: 



PROFIT SHARING REPORT 5 

"Neither should the considerable percentage of dubious 
results shown by this inquiry lead to the sweeping conclusion 
that all profit sharing experiments are worthless. Many of 
them, from the standpoint of special local conditions or by 
contrast with some previous order of things, no doubt show 
a net improvement in the welfare of the employees affected 
and the morale of the plants. The real significance, both of 
the organized labor attitude and of the proportion of failures 
and doubtful results, lies in their bearing upon the possible 
value of profit sharing as an industrial remedy of general 
application. 

"This in turn involves consideration of the fear of organ- 
ized labor that the employers' real interest in profit sharing 
lies in its alleged usefulness as a means to weaken and disrupt 
the trade unions, and that with this once accomplished the 
employing interests would be free to regulate wages and hours 
to suit themselves, with no effective equality of bargaining 
power left in the hands of the workers. 

"Such, at any rate, is the labor attitude as expressed by 
trade union representatives. It is not within the scope of the 
present inquiry to examine the merits of organized labor's 
objections to profit sharing, nor to determine whether the 
interests of labor generally would be safer under profit shar- 
ing than with the economic power of organization in its own 
hands. This is a very large problem in itself, second to few 
others in its bearing upon the future of our industrial and 
social institutions. Its gravity should be borne in mind in 
any consideration of proposed substitutes for the means which 
so important an element of the wage-earning class has consid- 
ered necessary to secure its rights and advance its welfare, 
ever since the beginnings of the modern industrial system." 

The import of the testimony as a whole in this work 
carries the reader to one general conclusion: The personality 
of the conductor may lead to great good in a faulty plan and 
it may bring ruin to a sound plan. More than mechanism 
must enter into profit sharing. Whether efficiency is the aim, 
or philanthropy, or aloofness from the "labor movement," 
or paving the way to a better society, what is requisite is the 
leadership of a strong, wise, patient and practical character, 
especially during first steps. 



4 THE NATIONAL CIVIC FEDERATION 

While for convenience, the classification of the book is in 
chapters on percentage of profits, special distributions, stock 
ownership and exceptional, abandoned and proposed plans, 
etc., the fact is that few of the plans are distinctly and wholly 
in one or the other of these divisions. Many are not, accu- 
rately, even profit sharing plans. The variety presented tells 
the fact that if there is to be a science of pure profit sharing 
few employers have arrived at a clear perception of its true 
principles and logical practices. No reason this, of course, 
for its advocates to weaken in promoting their ideals. Differ- 
ent conditions may give rise to permanent variations in 
details. Meantime, by reading the interesting experiences of 
their collaborators, many of the contributors to these pages 
may learn what is not — as well as what is — profit sharing. 

It may be ventured that there is point to every one of the 
letters in this publication. There is no monotonous reitera- 
tion of one method of treatment, or of one accepted prescrip- 
tion, for the industrial ailment of unrest. Nor is there one 
invariable code of rules and regulations for establishing jus- 
tice in all industries alike in the division of profits. There is 
not only a dissection of business and industrial undertakings 
in their relation to labor, but there is multifarious presentation 
of particular phases of the subject. The hundreds of letters 
received in the offices of the publishers of this work testify 
that the subject is of intense interest not only to men at the 
head of productive or distributive enterprises but also to 
labor representatives, instructors at institutions of learning 
and leaders of thought among churchmen. 

The reader of these pages will necessarily have in mind, 
in comparing the 1916 descriptions with those of 1919, and 
noting changes in methods where these have taken place, that 
the intervening years have been a period of war. Bonus pay- 
ments for the day, the week, the month or the year, or even 
for piece work, have multiplied. Wages and salaries have 
mounted, in peaks, irregularly. From June, 1914, to October, 
1919, the average increase in New York factory office salaries 
was 41% as compared with 92% for all factory shop wages. 
The pressure of the increasing cost of living, of the augmented 
strength of trade unionism, of the competition of employers 
for wage-workers, brought to profit sharers baffling questions 
non-existent in time of peace. Yet despite this situation, the 



PROFIT SHARING REPORT 5 

evidence as here printed does not support the assertion, made 
by the author of a particular plan, that "hardly a single plan 
that was in use five years ago is still in use in anything like 
the application or method with which it was started." It is 
true, however, that certain of the establishments noticed in 
the edition of 1916 have sent in no reports for the present 
edition, and therefore mention of them is omitted. Every 
reader of this work — it is assumed that those who read it will 
be both interested and competent to form their own judgment 
— will, as he proceeds, make his own analyses of the actuali- 
ties of the testimony. No detailed analysis is attempted in 
this introduction in view of the room for differences in 
conclusions. 

In general the advocates of profit sharing emphasize these 
arguments: It promotes more continuous service; reduces 
cost of production; secures more regular attendance at work; 
builds up confidence and creates a spirit of co-operation; gets 
rid of rolling stones; encourages home building; enables a 
company to keep its employees during rush seasons; keeps 
down expenses; induces salesmen as well as others interested 
to work harder; promotes efficiency, interest and loyalty; and 
increases the profits of the business. On the other hand, dis- 
appointment is thus expressed : The efforts of employers were 
not appreciated by the men; they seemed to prefer their total 
earnings in fixed wages with no variable element; they were 
suspicious of the employer's motives; they insisted upon join- 
ing unions and presenting demands in spite of the employer's 
efforts to give them a share in the extra gains of the business; 
when stock was sold to employees upon favorable terms they 
would dispose of it on a profit when its value rose, and so get 
the habit of watching the stock market; when the profit distri- 
bution was large the employees learned to expect a similai 
bonanza every year, and were disgruntled if they did not 
get it, to say nothing of their discontent if conditions forbade 
any extra payment at all; and all schemes of this sort are 
necessarily complicated and hard to understand, so that the 
workers, especially of the less intelligent grades, are not 
easily convinced that the system really benefits them and isn't 
merely a device to withhold a part of what they might other- 
wise demand and get. 



O THE NATIONAL CIVIC FEDERATION 

However, if "the sort of profit sharing that is practiced 
between partners in business" is to be followed in the methods 
of profit sharing between employers and employees, the books 
of the employers must be open to representatives of the em- 
ployees, so that grounds of mistrust as to what the profits 
really are may be removed, and when that stage of clearing 
the way to declaring the funds to be divided is reached many 
of the difficulties in winning the confidence of the wage- 
workers are overcome. 

Indications of the prominence which profit sharing is 
taking at the present time is seen by the attention given the 
subject by leaders in finance and business and consequent 
newspaper notice. Mr. Perkins' "The Workers' Fair Share," 
and his article on the question in the "Rotarian Magazine," 
brought out a wave of editorial comment throughout the 
country. 

No effort has been made by the publishers to include 
information relating to the welfare methods now so common 
to many American companies, nor have the so-called demo- 
cratic plans been included. But in many of the reports the 
facts as to welfare in connection with profit sharing have been 
permitted to remain, as exhibiting the entire policy of the 
establishments in question. 

Several hundred newspaper reports of Christmas or New 
Year bonus gifts have been collected by the publishers, but 
accounts of them do not properly find place in the records of 
profit sharing. 



A publication of the full details of the plans described in 
this volume would require at least three times its present bulk. 
Mention is usually made of the issue of pamphlets or other 
printed matter in connection with the description of plans the 
minor provisions of which might interest certain of the 
readers. 

For exhaustive reports upon profit sharing and labor co- 
partnership in the "United Kingdom" and upon the same sub- 
ject "Abroad" those published by the British Board of Trade 
in 1912 and 1914, respectively, are the most valuable docu- 
ments to be consulted. Both contain extensive bibliographies. 



PROFIT SHARING REPORT 7 

The "Labor Co-partnership Association," 6 Bloomsbury 
Square, London, the central authority on the subject, issues 
periodically much matter in print describing the progress of 
co-partnership in Great Britain. 

Bulletin 208, December, 1916, Bureau of Labor Statistics, 
United States Department of Labor, "Profit Sharing in the 
United States," contains a "list of references (in English) on 
profit sharing." In the list are several hundred titles. A 
drawback to the 171 pages of reading matter in this bulletin 
is that while selected groups of plans are analyzed in detail, 
they are referred to by means of numbers, without giving the 
names of the firms or companies. 

A "Report on Industrial Morale," issued by Fuller and 
Smith, advertising, Cleveland, contains a bibliography relat- 
ing to profit sharing and other labor subjects of the present 
day. 

Modern Business Report No. 14, "Profit Sharing," issued 
by Alexander Hamilton Institute, New York, 1919, gives 
analyses of seventeen prominent profit sharing plans of vary- 
ing types. 



8 THE NATIONAL CIVIC FEDERATION 



PROFIT SHARING: 

or, The Worker s Fair Share. 
George W. Perkins. 

(Address before The National Civic Federation, September 11. 1919.) 

'The worker's fair share" has been a real problem ever 
since the world began. It has changed greatly as civilization 
has progressed, and has crowded harder and harder for solu- 
tion as intelligence and education have spread and broadened. 

The worker's fair share was an unsolved problem when 
the expression that designated the relationship between the 
man of capital and the man of labor was "owner and slave." 

It still existed when the expression of relationship became 
"master and man." 

It still exists in these days, when the expression of rela- 
tionship is "employer and employee." 

These very changes in the expressions used to designate 
the relationship between capital and labor show that steady 
progress has been made toward solving the problem of the 
worker's fair share. 

I take it that everyone believes that we cannot go back to> 
the old conditions; that we must move forward to an even 
better relationship than that expressed by the term "employer 
and employee." 

You ask: "What is this newer relationship to be and what 
term will express it?'' I answer that I believe it must be 
"partners." 

If I am right, then the next question is how can this rela- 
tionship be worked out so as to bring the best results to all 
concerned? 

This problem has greatly interested me for thirty years. 
I have studied it earnestly, not from books, but from experi- 
ence obtained in the hard knocks of everyday work in the 
various business undertakings with which I have been con- 
nected. 

Twenty-five years ago I became convinced that only 
through profit sharing that was real, honest and open could 



PROFIT SHARING REPORT V 

we hope to find anything like a satisfactory and permanent 
method of arriving at the worker's fair share. 

Ever since that time I have improved every opportunity 
to spread the gospel of profit sharing and to have its prin- 
ciples adopted by business organizations, and I have greatly 
appreciated the honor of serving as chairman of your profit 
sharing committee since it was organized, 

I recall that I read a profit sharing paper before this 
organization about twelve years ago, and I find little, if 
anything, to change in the basic principles then laid down. 
I believe the work that has been accomplished meanwhile has 
been worth while and that the time is now ripe for us to push 
it harder than ever along constructive lines. 

I have found that my views on profit sharing, and my 
beliefs as to how to apply it, differ radically from those of 
many other people; that the plans I have been instrumental 
in having adopted are very different in application and in 
results from many other so-called profit sharing plans. I 
want, if possible, to point out wherein these differences lie. 

Profit Sharing Not Philanthropy. 

In the first place, I do not look upon profit sharing as 
philanthropy or a form of benevolence. 

I do not put it in the same class with gifts at Christmas- 
time or bonuses at the end of the year. I do not approve or 
believe in any plan that even savors of giving a man some- 
thing for nothing. 

I do not believe that any self-respecting man wants any 
such arrangement, and I do not believe that any broad- 
minded, self-respecting employer can, in the long run, afford 
to have any such arrangement. 

The profit sharing I believe in is the kind that is real; 
the kind that promotes thorough and efficient co-operation 
between employer and employee; the kind that makes part- 
ners of employees; the sort of profit sharing that is practiced 
between partners in a business. 

Anything short of this is bound to result in failure and 
will widen rather than narrow the breach between employer 
and employee. 

Close observation, coupled with considerable experience, 
has convinced me that practically all the many failures in 



10 THE NATIONAL CIVIC FEDERATION 

profit sharing, both in this country and in Europe, have oc- 
curred because at bottom the plans were not honestly devised 
nor equitably worked out. 

In nine cases out of ten, at some point in the practical 
application of the plans that have failed, the fact has de- 
veloped that they were not mutually beneficial; they either 
did not enhance the efficiency of the men in such a way as 
to satisfy the employer, or else did not distribute profits in 
such a way as to benefit and satisfy the employees. 

No partnership where the profits are shared by two or a 
half dozen partners could last any length of time unless 
mutually beneficial, and the same rule holds good in a larger 
partnership where the profits are shared among many 
partners. 

No man or firm or corporation that is thinking of adopt- 
ing profit sharing can hope for success, unless prepared to 
approach the subject in this spirit and deal with it in an 
absolutely honest, open and broad-minded manner. 

As I have said, the relation between employer and em- 
ployee has changed with the centuries. 

Originally it was owner and slave; then it was master and 
man; now it is employer and employee, each stage of develop- 
ment bringing the employer and employee into closer co- 
operation. What has caused this change in relationship? 

In my judgment the cause is found in the vast and broad 
educational forces that have been at work in the world. 

Since we founded this country we have spent approxi- 
mately as much money on our educational systems as on our 
railroad systems. 

We consider our railroads financially successful if they 
earn dividends. 

If our educational systems are successful the dividends 
we get from them are minds that think better, more clearly, 
more independently. 

Right now, this country is getting such dividends from 
its vast investments in educational plants. 

In the industrial world, in the relations between capital 
and labor, between employer and employee, we are getting 
these very dividends, and getting them direct and in cumu- 
lative fashion on the wage question. 



PROFIT SHARING REPORT 11 

In the past, the man who was not educated or trained to 
think independently struck because he wanted $2 a day if he 
was only getting $1.75; and for quite a period labor differ- 
ences were settled on this basis. 

I believe that we are rapidly passing out of that period, 
for our laboring people are so well educated and so able to 
think independently that, in many cases, they are no longer 
striking for a definite increase in wages, but for what they 
regard as a fairer proportion of the profits of the business 
in which they are engaged. 

If I am right about this, then we are rapidly leaving 
behind the period when labor disputes could be settled by a 
mere increase in wages and are entering the period when 
profit sharing in some form must be practiced. 

Therefore, the question is, how can it be practiced effec- 
tively? 

Outline of a Correct Profit Sharing Plan. 

A good many years of actual experience have made me 
very optimistic regarding profit sharing plans worked out 
along the following lines: 

First. Every business has, first of all, to earn operating 
expenses, depreciation, and fair returns on honest capital- 
ization. 

Second. I believe that every business should consider 
that the compensation paid employees is for the purpose of 
earning a sum of money sufficient to pay the above mentioned 
items. 

Third. I believe that any profits over and above such 
sum should, on some percentage basis, be divided between 
the capital used in the business and the employees engaged 

in the business. 

Fourth. I believe that in neither case should these profits 
be immediately withdrawn from the business ; that they should 
be left in the business for a reasonable length of time, to 
protect and increase its financial strength and safety; that, 
in the case of capital, its share of these profits should be car- 
ried to surplus; that, in the case of employees, their share 
of these profits should be distributed to them in some form 



12 THE NATIONAL CIVIC FEDERATION 

of security representing an interest in the business, and that 
each employee should be required to hold such security for 
a reasonable length of time, say three to five years. 

Fifth. I believe that the employee's share of these profits 
should be allotted to them as nearly as possible on the basis 
of the compensation they receive. Up to this date, this has 
proved to be the best method. 

Results Attained by a Proper Plan. 

Now, let us see what such a plan means : In the first place, 
it means that under such an arrangement each employee 
becomes a working partner in the business. 

He is on the same footing as the financial partners, for if 
the concern is a partnership with, say, four or five members, 
the partners themselves are drawing out each year what, in 
a way, might be called salaries, viz., approximately the 
amount of money necessary to meet their general living ex- 
penses, leaving their surplus profits in the business. 

Any partnership or any profit sharing plan that divided 
up the profits and withdrew them in cash at the end of every 
year could not last very long. 

Why Some Profit Sharing Plans Fail. 

Many profit sharing plans have divided profits with em- 
ployees on a cash basis and turned the money over to the 
employees every so often, usually once a year. 

The result has been that if a man earning $1,000 a year 
received $200 at the end of the year from a profit sharing 
plan, he promptly lifted his living expenses from a $1,000 
basis to a $1,200 basis, and began to look upon his income 
as $1,200 rather than $1,000, and the extra $200 did little 
to increase his activity and efficiency, or to promote his intel- 
lectual efforts in the business concerned. 

Then, if a period came when business was dull or poor 
and he did not get the extra $200, he found fault with the 
owners of the business and became grouchy and inclined to 
lose interest in his work. 

If he did not use the $200 for his living expenses, he 
probably invested it in a suburban lot or in some stock that 



PROFIT SHARING REPORT 13 

was recommended to him, or in something that he knew little 
or nothing about. 

Then, if his investment began to go wrong, he worried 
about it, and part of the time which he was being paid to 
devote to the business in which he was engaged would be 
expended in worrying about his investment in the business 
in which he was not engaged; whereas, if his money were 
invested in the business in which he was engaged, his desire 
to see his investment succeed and bring him further profits 
would be converted into efforts that would be of some prac- 
tical benefit, not only to himself, but to the stockholders and 
his co-workers. 

In short, little real substantial benefit comes from a profit 
sharing plan where the profits are paid out in cash, except 
perhaps where a man uses the money toward buying a home. 

There is, therefore, a serious weakness somewhere in 
such a plan, and the weakness lies in the fact that profit shar- 
ing cannot be really beneficial, either for employer or em- 
ployee, unless conducted on a partnership basis and coupled 
with profit saving. 

Looking at it from the viewpoint of capital, the object 
to be accomplished through the adoption of profit sharing 
is added interest in the business on the part of employees, 
which in turn brings higher efficiency. 

Looking at it from the standpoint of the employee, the 
object to be accomplished is a fairer remuneration for serv- 
ices rendered. 

Therefore, any profit sharing plan that fails to accom- 
plish both of these results breaks down sooner or later. 

Full Publicity Needed About the Business. 

In establishing profit sharing it is of the utmost im- 
portance that the entire organization, the wage and salary 
earners, know in advance exactly what they are expected to 
accomplish. 

I mean by this that, on entering a new year, they should 
know exactly what the preceding year's accomplishments have 
been. The annual statement of the concern should be full 
and explicit, so that every man engaged in the enterprise will 
know what business was done in the preceding year and on 
"what basis profits were and are to be distributed. 



14 THE NATIONAL CIVIC FEDERATION 

An honest, detailed annual statement tells him officially 
what the profits were, if any, and this fixes a minimum goal 
for the coming year, which everyone, individually and col- 
lectively, will bend every energy to reach and exceed by as 
large an amount as possible. 

Under such an arrangement as this, each man, in place 
of working solely for himself in his own department, will 
pass on to other departments any ideas that occur to him that 
might help that other department, and in that way benefit 
the organization as a whole. 

In my judgment, some profit sharing plans are radically 
wrong in this respect. They distribute profits by depart- 
ments or in some way other than on the basis of the com- 
pany's success as a whole. 

This narrows the vision of the individual, and he lacks 
the proper incentive to help wherever he can, whether in his 
own or another department. 

The right kind of profit sharing offers definite goals that 
an organization, individually and as a whole, can buckle down 
and work for, and it is astonishing how such a plan of profit 
sharing will heighten the esprit de corps. 

It removes petty jealousies; it makes a man eager to pass 
his ideas on to the man in the next department, and causes 
them to vie with one another to reach and exceed the figures 
reached in the preceding year. 

A detailed annual report by the company is not only 
necessary to show the organization in prosperous years how 
the profits were arrived at and what they amounted to, but 
equally necessary in lean years to show how the losses were 
arrived at, what they amounted to and why there are no 
profits to distribute. Gradually, as the employees in the or- 
ganization become part owners in the business, you broaden 
and deepen their interest in their work. 

They begin to think and speak of the business as their 
business ; they work for it as their business, not your business 
or somebody else's, and in place of "knocking" it they praise 
it and "boost" it in every way they can, for they have become 
part owners through being security holders and are receiving 
their interest or dividends at the same time and in the same 
manner as other security holders receive theirs. 



PROFIT SHARING REPORT 15 

In other words, once the employees become security 
holders, they share in interest or dividend distributions and 
other profits, not only as security holders but as employees. 

Some Objections to the Plan Answered. 

Many people have said to me: "Oh, but it takes a long 
while for a man who is only saving a small sum each year 
to acquire much of a financial interest in the concern by 
which he is employed." 

I have always found that such criticism comes from some- 
one who has not given sufficient thought to the subject, for a 
small interest means as much to the man having a compara- 
tively small salary as a large interest does to the man of 
large affairs. 

Let us summarize some of the advantages of this method 
of profit sharing: 

First. It is real, it is genuine. The organization as a 
whole, and each individual in it, has a definite goal for the 
year's work. 

They know at the beginning of the year how much money 
must be earned to cover what we will call fixed charges. 

They know that they are being paid salaries to earn those 
fixed charges. 

They know that they share in all profits over and above 
those fixed charges, and 

They know the basis on which they share, and that the 
amount of such profits largely depends on the individual and 
collective effort of each individual in the organization. 

This in itself is of great practical value to the business 
from a dollar-and-cent standpoint. There is no philanthropy 
about it. 

The employees have a certain definite goal to reach. If 
they reach it they are paid a definite percentage for doing so. 

It is a definite business proposition, based on the prin- 
ciple of profit sharing as practiced in partnerships. 

Second. Having reached the goal set, the money over 
and above the salaries they are paid — in other words, their 
profits — are invested in the business in which they are en- 
gaged and on which their whole time and thought and energy 
should be centered. 



16 THE NATIONAL CIVIC FEDERATION 

What a great advantage this is to the employer, and what 
a spur and incentive to the employee! 

What more valuable insurance policy could an employer 
have against a year of poor earnings? 

What a real, genuine interest it arouses in the worker 
for the business in which he is engaged! 

The whole atmosphere, the whole relationship is changed. 

The employer need give little thought to whether or not 
his men are "soldiering" on him, whether or not they are 
really giving to their work the best that is in them; and the 
employee need spend little time wondering whether or not 
he is being properly compensated. 

The whole relationship is placed on a new basis, not 
antagonistic, as heretofore, but co-operative. 

This plan is vastly different from the one now practiced 
by which one set of men working in a business, viz., the capi- 
talists and partners, leave most of their profits in the business, 
while another set of men, working shoulder to shoulder with 
them, viz., the employees, each year take their profits out of 
the business and put them somewhere else. 

The Kind of a Profit Sharing That Does Harm. 

It is also vastly different from the many bonus schemes 
in vogue. 

It differs greatly from the plan of arbitrarily setting 
aside, in a prosperous year, a certain lump sum of money 
and dividing it on a percentage basis among the employees. 

Under such an arrangement no man who gets any of the 
money has any very definite idea of what he did to earn it, 
what it represents, or what he individually can do to ensure 
the receipt of some such sum during the following year. 

In fact, I am convinced that such bonus giving, erro- 
neously called profit sharing, has done more harm than good, 
for in many instances it has caused employees to feel that 
said bonuses were given them because the business was earn- 
ing fabulous sums of money, a tiny little bit of which was 
thrown to them as a sop to make them feel kindly disposed 
toward the owners, or in order to ward off a demand for a 
general increase in wages. 

In short, such bonus giving simply stirs up trouble rather 
than alleviates it. 



PROFIT SHARING REPORT 17 

Profit sharing on the basis I favor is sometimes objected 
rto by men or concerns who do not wish to let even their own 
employees know how little or how much money they are 
making each year. 

To such men I always say (and each year I am more and 
more certain that I am right in saying it) that they are very 
short-sighted if they do not hasten to change their policy. 

If they are not making enough money and the business 
is running on a close margin each year, then by all means 
they should set their situation before their men, adopt such 
a profit sharing plan as I have outlined, and get the genuine 
co-operation of every man toward increasing the profits and 
putting the business in a prosperous condition. 

They are now paying wages and salaries, and many a 
night go home wondering whether the employees are really 
earning their salaries. 

Under such a profit sharing plan as I have outlined they 
have a substantial guarantee that the salaries will be earned 
because in aiming to share in profits over and above fixed 
charges the men are all the more certain to earn at least the 
fixed charges. 

And would any proprietor or manager hesitate to pay a 
handsome premium each year for an insurance policy guar- 
anteeing that every employee in the business would have the 
business on his mind and work as hard for its success as the 
proprietor or manager does? 

One more thought in this connection. 

The man who is running on a small margin and making 
little profit may object to making his business affairs public 
property, on the ground that he would be putting a weapon 
into the hands of his competitors. 

Such a man's best protection against his competitors is 
a loyal, closely knit organization of the highest efficiency, and 
this important advantage he can only secure through a bona 
fide profit sharing plan. 

As for the man who is making so much money that he is 
afraid to let even his own employees know how much he is 
making, to that man I say that he is the man who, more than 
any other, is responsible for the serious differences to-day 
existing between capital and labor, for with the growing 
intelligence of the masses, how can he expect such a situation 
to continue? 



18 THE NATIONAL CIVIC FEDERATION 

Every year, yes, every day, it becomes clearer and clearer 
that such a condition will no longer be tolerated and must 
speedily pass away. 

Would it not be better for him to use some intelligent 
foresight and meet what clearly are to be the immediate 
future demands of public opinion? 

As for the man who is making large profits but who 
objects to profit sharing on the ground that he wants to put 
those profits away against the day when business may be poor. 

To such a man I say that he had better use some of those 
profits to interest his men in his business more deeply and 
do this to such an extent that if the dark days come he can 
be pretty certain that his men will stand by the business in 
a way that capital alone never can. 

Profit sharing on the basis I favor is also sometimes- 
objected to by concerns whose securities are closely held. 
There are many ways to obviate this difficulty. 

Some concerns can increase their capital. 

Others that cannot, or that cannot do so for a time, can 
obviate the difficulty by issuing certificates of participation 
that will draw the same percentage of profit as the regular 
securities of the business. 

In other words, where there is a genuine desire to share 
profits a way can always be found. 

The day of secretive methods is passing rapidly. The 
day of publicity is at hand. The change is a perfectly natural 
evolution due to broader education and improved intercom- 
munication and has also come about because it is second 
nature to be less suspicious and afraid of that which is known 
than of that which is unknown. 

Any profit sharing plan without an open, honest balance 
sheet and detailed annual report will never succeed. 

I am convinced that labor is entirely willing that capital 
should have its fair reward and proper protection, but in 
this country we have had too many instances where capital 
had demanded improper protection and taken exorbitant re- 
ward ; and one of the main reasons why the serious problems 
confronting us to-day are so difficult of solution lies in the 
fact that too many men of capital are still arrogant and un- 
reasonable, and absolutely unwilling to look with sufficient 
care and fairness into the causes that are producing the views 
and opinions so largely held by our people at this time. 



PROFIT SHARING REPORT 19 

On the other hand, one of the most serious drawbacks to 
increased output and economical production is the listless, 
indifferent service rendered by a large percentage of em- 
ployees. 

Making partners of employees, through profit sharing, 
would correct this as nothing else could. 

Profit Sharing That Has Been a Success. 

Some companies with which I am connected have realized 
the trend of the times and have for some time been practicing 
profit sharing along the lines I have indicated. 

They believed that profit sharing plans based on such 
principles would so knit their vast organizations together, 
and would so strengthen and develop the esprit de corps as to 
make it possible for the companies to increase their business 
and their earnings; and they were willing to share this in- 
creased success with their employees. 

So far they have every reason to congratulate themselves 
on the results. 

In all parts of their business, at home and abroad, in the 
office force, in the factories, in the sales department, every- 
where, the individual employee's interest in the business is 
much greater than formerly. 

The saving in waste everywhere is noticeable. 

The employees are vieing with one another more and 
more to improve their respective and other branches of the 
business. 

All this means success for the company, profits for the 
stockholders, extra compensation for the employees. 

It means getting men on salaries and wages to have a live, 
keen interest in the management of the business. 

It means getting an organization of men to work as real 
partners. 

It means recognizing the right of the employee to a fairer 
share of the earnings of the business in which he is engaged. 

In short, it means co-operation that is complete, in that 
it benefits stockholder, employer and employee. 

While all this can more readily be accomplished in a 
large business, it can also be successfully accomplished in 
a small business if approached in the proper spirit; and if 
applied generally it would remove to a considerable degree 



20 THE NATIONAL CIVIC FEDERATION 

the dangers that are menacing modern industry, and which 
are largely caused by the feeling on the part of the masses 
that, through wages, they are not getting their proper pro- 
portion of the money earned in a given industry. 

An industrial democracy of the most ideal sort is found 
in true profit sharing; an industrial democracy that makes 
real partners of capital and labor, and yet preserves the right 
of private property; that preserves and promotes the great 
business asset that comes from individual initiative; that re- 
tains the capitalist's incentive to enterprise, while giving the 
worker a new inspiration for effort that humanizes large 
organizations of men; that promotes good will and industrial 
peace. 

All these things this country of ours needs now as never 
before. 

The shelves of the world are bare. The entire world 
needs supplies — supplies of food, clothing, building mate- 
rial, everything. 

As long as the supply of these things is so low and the 
demand for them all over the world is so great, the cost to 
the consumer will remain high. 

Therefore, one of the surest paths leading to a reduction 
in cost to the consumer is to raise and manufacture a large 
supply of these necessities as quickly as possible. 

Linked with the desire to supply ourselves with food, 
clothing and other necessaries at low cost is our desire to 
furnish the world with these and other articles, in order to 
extend our trade and foster the prosperity of our people as a 
whole. 

But as practically every other nation hopes to secure a 
large part of this trade for herself, is it not a certainty that 
competition among the nations will be keener and sharper 
in the immediate future than it has ever been in the history 
of the world? 

How can we possibly meet this increased competition if 
we are divided among ourselves? 

Could there be two more potent reasons why we Ameri- 
cans should have the closest possible co-operation between 
capital and labor? ' 

Could anything bring higher efficiency, greater produc- 
tion? 



PROFIT SHARING REPORT 21 

The only way to secure this co-operation in the highest 
degree is by eliminating the distrust that has existed between 
capital and labor for so many years, and establishing con- 
fidence in its place. 

Nothing will do this except frank, open dealing, publicity 
as to earnings and a fair division of earnings. 

Since the beginning of time, no country has ever had such 
an opportunity to extend its trade, increase its prosperity and 
better the material condition of every one of its people as 
has the United States of America at this very hour. 

The only factor missing is that of close co-operation here 
at home among ourselves. 

It seems inconceivable that we will fail to realize where 
our weakness lies and fail to adopt the one and only remedy 
for it. 

In the strenuous competition with the rest of the world 
that this country is on the eve of facing, could we have a 
stronger weapon than complete co-operation between capital 
and labor at home? 



22 THE NATIONAL CIVIC FEDERATION 



DEFINITION OF PROFIT SHARING. 

As long ago as 1889, an International Congress on Profit 
Sharing was held at Paris, which was largely attended. At 
that meeting a resolution was passed, defining profit sharing 
in the following terms: 

i4 The International Congress is of the opinion that the 
agreement, freely entered into, by which the employee 
receives a share, fixed in advance, of the profits, is in 
harmony with equity and with the essential principles 
underlying all legislation." 

This definition was adopted by the International Co-opera- 
tive Congress held in Delft in 1897, reiterated by the Inter- 
national Congress on Profit Sharing held in Paris in 1900, 
and is to-day the generally accepted definition of true profit 
sharing. 

The International Co-operative Congress held in Paris in 
1896 appointed a special committee to report on the exact 
meaning of the term Profit Sharing, and the report of the 
committee submitted to the Delft Congress in 1897, embody- 
ing the above definition, also stated: 

"With respect to the 'agreement' mentioned in the 
definition, the committee considers that while an agree- 
ment binding in law is the normal form, it does not 
exclude cases in which the agreement has only a moral 
obligation, provided that this agreement is, in fact, 
honorably carried out. 

"By a 'share' in profits is meant a sum paid to an 
employee, in addition to his wages, out of the profits, the 
amount of which is dependent on the amount of these 
profits. If an employer undertakes, for example, to con- 
tribute to a pension fund £1 for every £2 contributed 
by his workmen, this is not a case of profit sharing, unless 
the undertaking is to pay out of profits only, because the 
sum payable under the agreement does not depend upon 
the amount of the year's profits. 

"With respect to the 'profits' a share in which is, under 
a profit sharing scheme, allotted to the employees, these 
profits are, in the opinion of the committee, to be under- 



PROFIT SHARING REPORT 23 

stood as the actual net balance of gain realized by the 
financial operations of the undertaking in relation to 
which the scheme exists. It is, therefore, necessary to 
point out that the payment of bonus on output, premiums 
proportionate to savings effected in production, commis- 
sion on sales, and other systems under which the amount 
of the bonus depends upon the quality or amount of the 
output or volume of business, irrespective of the rate of 
profit earned, does not constitute profit sharing." 

The Encyclopedia Britannica (Eleventh Edition) de- 
fines it: 

"Profit Sharing (i. e., between employer and em- 
ployee) a method of remunerating labor under which 
the employees receive in addition to ordinary wages a 
share of the profit which the business realizes. The term 
is not infrequently used loosely to include many forms of 
addition to ordinary wages, such as bonus on output or 
quality, gain sharing and product bearing. Yet strictly 
where an employee or group works for a share of the 
products, or is paid so much in addition to ordinary wages 
in proportion as the product exceeds a certain standard, 
in neither of these cases have we profit sharing, for the 
net result of the business may be a large profit or a 
small one or a loss and the employee is unaffected. In the 
same way if a workman is employed on the basis that if in 
doing a particular job he saves something out of a stipu- 
lated time or labor, or a stipulated amount of material, 
he shall receive in addition to ordinary wages a proportion 
of the value so saved, that is technically gain sharing, 
not profit sharing. Even where the bonus depends strictly 
on profit, it is not reckoned as profit sharing if it is 
confined to the leading employees. 

"An agreement is the essence of the matter. It is not 
profit sharing where an employer takes something from his 
profits at his own will and pleasure and gives it to his 
employees." 

While the principle of profit sharing in some form or 
other is undoubtedly of ancient origin, it was not until the 
year 1842 at Paris, France, that "profit sharing" in its strict 
sense was definitely applied to a commercial enterprise, in a 
house-painting establishment known as the Maison Leclaire. 
A sketch of this pioneer venture is given in another chapter.. 



24 THE NATIONAL CIVIC FEDERATION 



PERCENTAGE OF PROFITS. 

Under this classification the plans in general are based, 
more or less indefinitely, upon "percentage of profits." In 
very few cases, however, is the percentage "fixed in advance" 
as prescribed by the standard definition already given for 
precise guidance. In some instances the percentage is deter- 
mined when the results of the season's or the year's profits 
have been ascertained; in others fixed rates of interest or 
dividend on capital are reserved and the entire balance of 
surplus earnings divided between stockholders and employees. 
In the case of establishments having different methods of 
rewarding employees beyond wage and salary — by bonuses, 
pensions, insurance or otherwise — they have been placed in 
the following list if the larger portion of the share for the 
employees seemed to be divided by the percentage method. 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. 
A date in a sub-heading indicates the year in which the 
experiment under notice began.] 

American Light and Traction Company. 

new york city. 

(1916) This company controls a number of lighting 
and traction properties throughout the country, and several 
of these share profits with their employees. It is stated that 
none of the companies which have once introduced profit 
sharing has ever abandoned it, although some of them have 
since been sold to other interests. In the case of one com- 
pany, acquired about ten years ago, a strike occurred before 
the property had been under the new ownership long enough 
to entitle the men to receive wage dividends, and therefore 
none was paid. In another instance, it is stated that the wages 
prevailing at the time the plant was acquired were higher 
than those paid to employees of other properties, even with 
a wage dividend added, and accordingly profit sharing was 



PROFIT SHARING REPORT 25 

not established in this case. The number of employees 
affected by profit sharing in all the auxiliary companies 
where the plan is in operation is estimated at 7,000. 

Mr. Emerson McMillin, formerly president of all these 
companies, states that the only weakness which has developed 
in the wage-dividend plan, in his judgment, has arisen from 
the local policy adopted in certain cases of continuing divi- 
dends to the employees without change, in years when cir- 
cumstances compelled a reduction in the rate paid to stock- 
holders, the theory of all these plans being an equal percent- 
age to both. This action, growing out of sympathetic con- 
sideration for the men, nevertheless destroyed the spirit of 
the plan and led the employees to regard the dividend as a 
part of their wages, encouraging the idea that it did not matter 
whether good and intelligent service were rendered or not, 
the bonus would be received just the same. 

A wage dividend plan typical in most respects to those 
of all the affiliated companies is that of the Grand Rapids Gas 
Light Company. Since 1899 this company has paid semi- 
annual dividends on the wages of employees at a percentage 
at least equal to that declared on the company's stock for the 
same period. The intent was declared to be the rewarding 
of continuous and faithful service, and in order to participate 
employees must have been in the service at least 18 months 
preceding the payment of the extra award. The directors 
reserved the right to determine when, to whom and how these 
payments should be made, and to discontinue the plan at any 
time. Employees who resign or are discharged for cause do 
not share in the distribution for the half year. The plan at 
first excluded all executive officers, but several changes have 
been made in this respect, and at present the secretary, treas- 
urer and general manager are entitled to participate. The 
wage dividends paid under this plan have ranged from 6 to 
10% per annum. 

There is also in effect a stock subscription plan, under 
which the officers and heads of departments of the American 
Light and Traction Company and of the auxiliary properties 
are enabled to purchase common stock of their respective 
companies at a little less than the market price, and to pay 
for it in quarterly instalments. These payments must aggre- 
gate a sum that will equal 10% of the subscriber's annual 



26 THE NATIONAL CIVIC FEDERATION 

salary, and the purchase must be completed within and extend 
over a period of ten years. The company retains the stock 
in the subscriber's name until it is paid for in full, charging 
5% interest on the unpaid balances during the purchase 
period. Dividends declared otherwise than in cash, such as 
stock dividends, if any, are retained by the company for 
delivery to the employee when he has completed the pay- 
ments which entitle him to receive the stock subscribed for, 
but cash dividends are paid direct to the subscriber. It is 
stated that some of the beneficiaries have in this way obtained 
stock upon which their dividends now exceed their salaries,, 
and that the plan is wholly successful. 

(1919) Emerson McMillin, September 4: 

'The scheme of paying the workmen a dividend — com- 
puted on their earnings, at the same time and rate per annum 
as is paid to stockholders — is still in vogue in the companies 
owned by this firm for many years. It is not so extensively 
applied now as it was some years ago, as it has not been 
applied to the more recent purchases, and several companies 
where it was in vogue originally have been sold off. 

"The plan was of great value for a long time, but of 
recent years it has not proved of benefit. It has failed through 
the failure of local boards and managers to adhere strictly 
to the terms of the plan. The object was to interest the work- 
men in securing the largest net earnings, which of course gave 
them the largest pay. Through sympathy with the workmen 
in dull times, however, the local boards and managers fell 
into the habit of continuing to pay the employees the same 
dividend when the earnings fell off and stockholders' divi- 
dends were reduced or ceased. The result has been that with 
the passing years the employees lost their interest in earnings- 
and came to regard their dividends as part of their regular 
pay. The failure has thus been due entirely to the mistaken 
ideas of the companies and not to any fault of the plan or of 
the workmen. 

"No new system has been introduced since 1916. There 
are probably 10,000 workmen employed in this organization, 
and perhaps half of them are still getting dividends. Divi- 
dends are paid to managers and all below them, but not to 
presidents of companies. 



PROFIT SHARING REPORT 27 

» 

"In addition to the above, stock of the American Light 
and Traction Company was sold to all officers — presidents, 
vice-presidents, general managers, engineers, secretaries, 
treasurers, etc. — on ten years' time, at par, and they were 
required to pay off one-tenth each year, being charged 5% 
interest, and receiving all dividends on the stock. In some 
instances the officers' dividends have been worth more than 
the salaries they received." 

American Manufacturing Concern. 

wood novelties. falconer, n. y. 

(1916) The directors of this company announced a 
profit sharing plan as follows: 

Ten per cent, of the net earnings of the company will 
be paid to factory and office employees receiving less than 
$100 per month on the following basis, viz.: One-third 
of this amount will be distributed pro rata among the fore- 
men of departments. The balance of two-thirds will 
be distributed pro rata among all other employees who 
have been continuously in the service of the company for 
one year or more. Payment will be made after the inven- 
tory is taken and the books for the calendar year are 
closed. Checks will be included in the pay envelopes for 
the first pay day in May following the year in which the 
profits are made. 

(1919) The company's profit sharing plan as dated 
December 24, 1915, is still in effect. For 1919 the question 
was put to the vote of the foremen as to whether this plan 
should be eliminated and some other substituted. It was 
voted that this plan be retained. The average number of the 
employees is 190, the number that participate in the plan 
about 90. 

The American Rolling Mill Company. 

middletown, ohio. 1909. 

(1916) This plan applies to heads of departments and 
all salaried employees receiving $100 or more per month. 
Employees affected by this plan who are in the service of the 



28 THE NATIONAL CIVIC FEDERATION 

company on July 1, the beginning of its fiscal year, with every 
intention of so continuing, and whose record covering their 
past year's work is satisfactory to the board of managing 
officers, are permitted to participate in the "net profits" of 
the company to the extent of a specified percentage (say, for 
instance, one-tenth of 1 % ) , the amount being fixed separately 
in each case in proportion to the duties and responsibilities 
of the position held. 

By "net profits" the company means the net amount avail- 
able after all fixed charges, reserve funds, depreciation and 
dividends or interest on preferred securities have been re- 
served or paid. Amounts due employees under this plan are 
payable in cash on the day preceding Thanksgiving. 

Conditional Bonus. — All salaried employees not included 
in the percentage of profits plan are paid a certain percentage 
on yearly salaries, based on term and character of service. 
Term of service means continuous uninterrupted service. 

All salaried employees of the company, as described 
above, who are in its service on July 1 of each year, whose- 
work has been satisfactory to their superior officers, who in- 
tend to remain in the service of the company for the ensuing 
year, and who have been with it continuously as salaried em- 
ployees for at least 18 months and under two and one-half 
years, are allowed a sum equal to 5% on the amount of their 
salaries for the preceding year; those employed not less than 
two and one-half and under five years, 10% ; not less than five 
and under ten years, 12l/o%; ten years or more, 15%. 

The company states that the salaries are regulated after 
giving due consideration to term of service, responsibility of 
position, efficiency, loyalty and general ability shown in the 
discharge of duties assigned, and independent of any profit 
sharing plan. 

(1919) George M. Verity, president, October 11: 

"Our profit sharing plan covering salaried employees, as- 
effective in 1916, is still in force with such slight modifica- 
tions as have been made from year to year. It is now being* 
entirely revised to cover a more limited group of individuals 
and effecting changes in the method of distribution. 



PROFIT SHARING REPORT 29 

"As regards results, we feel that the plan has been satis- 
factory as far as the major portion of Armco men who have 
been affected by it are concerned. We do not feel that it has 
been entirely satisfactory as far as the lower salaried men 
are concerned, who have come into it from time to time on 
the old 'salary limit' basis. 

"Our average number of employees is approximately 
4,500, and the number of salaried men affected is approxi- 
mately 225. Only slight changes have been made in the plan 
since 1916. All of its basic principles and benefits have been 
retained. Armco has never had any labor troubles in its 
20 years of existence. 

"Since 1916 we have inaugurated a plan for the sale of 
stock to members of our organization. The first allotment 
was made one year ago, and the second allotment is just now 
being offered. We are heartily in favor of any 'sound plan' 
for sale of stock to the employees of a corporation. 

'We have been up to the present strongly in favor of 

profit sharing as a real incentive to effective co-operation. 
Due to the nature of our business, we have never been able 
to apply it to other than salaried men, but up to this time we 
always hoped that we might work out a plan affecting all of 
our employees. We are, however, rapidly coming to the con- 
clusion that profit sharing plans, as heretofore applied and 
the principle of profit sharing as generally understood, is not 
desirable and, in fact, is not wanted by works employees. 
The average workman cannot understand it. What he does 
want is more direct compensation — the best that can be se- 
cured for the work he does. We are in favor of a wage 
system based on a good day's wage for a good day's work, 
with a bonus system that will provide additional compensa- 
tion for production, efficiency, quality of product, up-keep 
of plant, etc. In other words, the producer can well afford 
to pay an additional compensation if the employee will in- 
terest himself in those vital problems. 

'We feel that 'profit sharing' as a factor in 'industrial 
stability' is only one of many things that can be done, but 
that it is really not one of the most important things to be 
done. Neither profit sharing nor any one of the many things 
that can be done in the carrying out of a real programme of 
'mutual interest' will be at all effective unless there is a f oun- 



30 THE NATIONAL CIVIC FEDERATION 

dation stone of 'mutual confidence' between the members of 
an organization and the management. A condition of 'mutual 
confidence' cannot be secured through the immediate appli- 
cation of any plan or group of mutual interest plans. It can 
only be secured through years of co-operation and after both 
the management and their employees have had ample oppor- 
tunity to prove the sincerity and good faith, each of the other. 
Industrial stability must be the result of evolution and not of 
revolution." 

Ballard & Ballard Company, 
flour millers. louisville, ky. 1886. 

(1916) Employees who have worked for the company 
two years begin to participate in an amount equal to 10% of 
the net profits of the company for the previous year. They 
participate in this 10% dividend in proportion to wages re- 
ceived by them. Special provision is also made for a limited 
number of trusted employees who receive anywhere from 1 to 
5% of the profits in addition to their salaries. The total dis- 
tribution to employees amounts to about 46% of the net 
profits. 

There is also an arrangement whereby the salaries of the 
employees are automatically increased from year to year, 
aside from the dividend plan. 

The company reports that they have never had any labor 
troubles of their own and that, "while their plan does not 
reach the rank and file, so well as it does the foremen and 
beads of the departments, they still regard it as a very great 
advantage in their friendly relations with their men. There 
may be a very few of the younger or more recently employed 
men who do not seem to value this participation in the profits, 
but after a few years of service it seems to be of real value 
in retaining the loyalty of the men." 

(1919) S. Thruston Ballard, September 23: 
'While the firm considers it desirable for all of the work- 
men to share in the profits, it must be admitted that with the 
unskilled worker and the more or less casual worker, of 
course, the profits do not mean anything, and he is not part 
of the plan. Originally profits were distributed only to those 



PROFIT SHARING REPORT 31 

who had been in the employ of the firm for two years or more. 
Later that plan was modified and there is now no such limit. 

"In these flour mills there are very few employees com- 
pared to the amount of the product and the value of the busi- 
ness, and therefore the management gets closer to the men 
than in many businesses where more workmen are employed, 
although apparently a much smaller business is done. For 
instance, there are in our plant only about 250 employees, 
whereas the business done amounts to from 20 to 30 carloads 
of product per day, and about $10,000,000 a year. These 
details are given merely to show that plans could be pursued 
in this business which would not be applicable to many others. 
In this company practically all of the workmen are known 
by name, and there is an unusual amount of personal contact 
between the workers and the management." 

From a circular issued by the firm: 

Regarding the prcfit sharing plan, our firm of Ballard 
& Ballard Company, in 1887, began the experiment of 
sharing 10% of its profits with its employees, part to the 
office force and part to the men in the mill. That 10% was 
gradually increased until before the war it amounted to 
about one-third of the profits before any dividend was 
made to the stockholders. 

One-third went each to my brother and myself as stock- 
holders, and the other third was divided among the office 
force and other employees of the mill in proportion to their 
salaries, and certain proportions of these profits being 
divided among the laborers, according to their wages. The 
amount given to each laborer usually amounted to from 
three to five weeks' wages. 

During the war we were compelled to modify our plans, 
owing to the fact that we were not allowed, under the 
United States income laws, to deduct more than a certain 
proportion of our profits for the purpose of distribution, 
and therefore our office salaries for the last two years have 
not been on the profit sharing plan. 

While all of our office men are absolutely loyal, so far 
as we know and believe, and while they are high class men, 
and most of them have been with us for years, still when 
we changed over from the profit sharing plan I thought I 
could notice some difference, and therefore I am firmly 
convinced that the profit sharing plan is a true system, not 
only for heads of departments and others in the office but 
for all labor employees as well. 



32 the national civic federation 

Barcalo Manufacturing Company. 

brass and iron beds, springs, mattresses, hammocks, etc. 

buffalo, n. y. 

(1916) This plan applies only to the principal em- 
ployees; those who, next to the directors, are responsible for 
the activities of the company's affairs. They receive a per- 
centage of all profits, and this is paid to them the last day of 
the year and before any of the earnings are set aside for regu- 
lar dividend purposes. 

Most of the 400 employees work under Taylor methods 
of scientific management. 

(1919) E. J. Barcalo, president, October 9: 
'There has been no change in our profit sharing plans, 
so called, since 1916." 

R. A. Bartley. 

WHOLESALE GROCER. TOLEDO, OHIO. 1904. 

(1916) The proprietor takes the legal rate of interest 
on his investment in the business as his share of the profits, 
after deducting his living expenses and a benevolent fund. 
The balance of the net profit is divided equally among all 
employees who have been in the service one year or over. 
The lowest salaried man receives the same share as the high- 
est, and in 1914 this amounted to $626 to each employee, in 
addition to salary. Since 1904 profits amounting to $158,- 
629.07 have been divided among the employees. In 1908 
no profits were divided owing to losses by fire. 

(1919) R. A. Bartley, September 4: 

"There has been no change in the system pursued in 1916. 
The amount of money distributed last year was $50,000, to 
which 49 employees were eligible. During the 15 years the 
amount distributed was $322,894.57. The result has been 
very good. There were no changes in the force last year. 
The average number of employees is about 62. In addition 
to the profit sharing system, last year a pension system was 
inaugurated which provides a regular pension of $50 per 
month for a man who is disabled after 25 years in the employ 



PROFIT SHARING REPORT 33 

of the company. It is the opinion of this company that in the 
course of time profit sharing will do away with labor trouble." 



Benoit System. 
men's and boys' clothes, malden, mass. 

(1916) The company has recently adopted a plan by 
which all of the employees, including the janitor, share in the 
earnings of the store. At the end of the fiscal year 10% of 
the net earnings, based on wages, is divided among all of the 
employees and paid in cash. 

(1919) A. H. Benoit, president, September 6: 

"Because of the many high war taxes on business, about 
March, 1918, it became necessary to discontinue our profit 
sharing plan. We then inaugurated a monthly bonus plan 
on the excess sales over the comparative month of the pre- 
vious year. If the sales for December, 1918, were $7,000 
larger than December, 1917, we paid a bonus of 5% on the 
$7,000 and divided it among the employees in accordance 
with their salaries. Our business is retail clothing stores, 
varying from 24 to 26 employees per store. 

'This plan in a great measure has solved the high cost 
of living problem with our employees. Because of the high 
price of goods and the large amount of money in circulation, 
it has been easy enough every month to beat the sales for the 
comparative month of the year before, and so the employees 
receive every month a very substantial amount of bonus 
money outside of their regular wages to make them con- 
tented. This bonus plan is still in operation and working 
fine, and we will probably keep going until conditions have 
got back to normal again, at which time we would be glad 
to go back to our original profit sharing plan of before the 
war." 

Boston Consolidated Gas Company, 
boston, mass. 1906. 

(1916) By the so-called sliding scale act, passed by the 
Massachusetts Legislature in 1906, the future divisible profits 



34 THE NATIONAL CIVIC FEDERATION 

of the company are made to depend upon the price charged 
for gas. The standard fixed by this act is 90 cents per 1,000 
cubic feet of gas, with dividends to the stockholders at the 
rate of 7% per annum. For every reduction of five cents 
below 90 cents per 1,000 cubic feet the company may pay 
1% additional dividend. 

This act does not apply the principle of the sliding scale 
to employees of the company, but on July 26, 1906, the 
directors, adopting this principle, decided to offer to the most 
efficient employees over and above their regular compensa- 
tion an annual share in the profits of the company, to be 
called a "premium." Premiums are calculated on the an- 
nual salaries or earnings at the same rate as the dividends 
on the stock of the company for the preceding year. In its 
announcement of this plan the company points out that in- 
creases in the premium rate to employees, like increases in 
dividends to stockholders, depend upon reductions in the 
price of gas, which in turn depend upon increased business 
and improved economies in operation. "Consequently there 
is a very direct relation between the collective efficiency of 
the employees and the percentage of the apportionment, which 
should result in increased effort on their part to reduce the 
price of gas and thus increase their proportion of the profits." 

All employees who have been in the employ of the com- 
pany for one year preceding July 1 of any year in which a 
premium is declared are eligible to participate in the profit 
sharing, provided in each case that the work of the employee 
has been, in the judgment of the heads of departments, such 
as to warrant participation. No deduction is made on ac- 
count of sickness except for the excess above two months' 
absence. 

A separate premium account, showing principal and in- 
terest and debit charges, is kept by the company for each 
employee who receives a premium. After the declaration 
of a premium to any employee, the amount of such premium 
is placed to his credit. 

When the amount credited to any employee is sufficient 
to purchase one or more preferred shares of the capital stock 
of the Massachusetts Gas Companies, at the then market 
price, the president of the company, at his discretion, either 



PROFIT SHARING REPORT 35 

(1) pays to the employee in cash the amount of such pre- 
mium or premiums or (2) purchases one or more of said 
preferred shares at the then market price for and on the 
account of the employee. The amount so expended is charged 
to the premium account of the employee; the shares so pur- 
chased are delivered to him and become his absolute prop- 
erty. 

Any premium or premiums or portions thereof, not dis- 
posed of under the above rule, remain to the credit of the 
employee on the books of the company. On all such balances 
it pays interest at the rate of 4% per annum. 

As all shares bought for employees in the above manner 
are their absolute property, they may sell such shares at any 
time. Before such sale, however, at least seven days' notice 
in writing must be given to the treasurer of the company on 
blanks furnished by it for that purpose, and if the sale does 
not receive the approval of the directors the employee selling 
may be dropped from the list of profit sharers for at least 
one year. 

The company has on an average from 1,000 to 1,100 em- 
ployees, of whom about 650 are profit sharers. From June 
30, 1907, to June 30, 1915, the company apportioned to the 
credit of the profit sharers' account $420,813.16, the average 
amount credited to each profit sharing employee's account 
being $ 676. 55, or nearly 75% of his yearly wages. The 
average weekly wages of these employees is $17.41. Up to 
June 30, 1915, 3,516 shares of stock had been distributed to 
employees, the average holding being 5.36 shares, and on 
that date the total of cash and stock to the credit of the profit 
sharers was $337,442,26. 

The company states that it is the intention and desire of 
the directors to include as profit sharers all employees who 
are, in their judgment, temperate, energetic, honest, capable 
and efficient, but the right is reserved to fix the number who 
shall receive premiums in any year. 

In the prospectus of 1911 describing the system it was 
stated that the logical extension of the plan by which em- 
ployees secure ownership in the business is to have them 
represented on the board of directors in order that they may 
have a voice in the management of the company. Accord- 



36 THE NATIONAL CIVIC FEDERATION 

ingly the company invited the nomination on the part of the 
profit sharers of a representative of their own selection, as a 
director, with full voting powers. This invitation was ac- 
cepted, and the present director is a man who has been in the 
employ of the company 65 years. 

(1919) E. T. Wrightington, vice-president, September 4: 

"In connection with the profit sharing plan of this com- 
pany, the most important features are, first, that while title 
to the stock rests with the employees a sale of stock, without 
approval, results in the employee being left off the profit 
sharing list in the future. As approval for sale of stock is 
given only in cases of emergency such as sickness, the em- 
ployees are encouraged to save the stock and thus develop 
the quality of thrift, and also secure an owner's interest in 
the business. 

,4 The other feature of this profit sharing plan which is 
important is that not all of the employees are included, some 
being excluded from the list if they do not measure up to the 
proper standard." 

The company gives this analysis of the plan: 

One of the great problems in the industrial life of 
to-day is to provide a point of contact between the em- 
ployer and the employee. 

Modern business is conducted on such a large scale 
that it is very difficult to maintain the personal relations 
of the old days which did so much to establish mutual 
understanding and confidence between the employer and 
the employee. 

The Boston Consolidated Gas Company has had a plan 
in vogue for some years, designed to accomplish this 
result. This plan is an extension of the profit sharing plan 
of the company and provides that the profit sharers of 
the company nominate a representative to serve on the 
Board of Directors of the company. 



PROFIT SHARING REPORT 



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38 THE NATIONAL CIVIC FEDERATION 

Under the profit sharing plan all employees who have 
been in the employ of the company for twelve months and 
who have proven to be temperate, energetic, honest, 
capable, efficient and loyal, are eligible to share in 
the distribution of the profits of the company. The 
form of the distribution consists in the purchase for the 
account of each such employee, an amount of preferred 
stock in Massachusetts gas companies at the market value 
equal to the same percentage on the wages of the employee 
as the rate of dividends paid on the stock of the Boston 
Consolidated Gas Company. For example, during the past 
year the company paid 7% dividends, and a profit sharer 
earning $1,800 would receive $126 in sock, or at the 
present market value about two shares of Massachusetts 
Gas preferred stock. 

The dividends of the company are fixed by the so- 
called sliding scale act, and the only way in which in- 
creased dividends can be paid is by reductions in price, so 
that it is to the interest of each employee to reduce the 
costs and to keep the price down as low as possible in 
order that his proportion of the profit sharing fund be as 
large as possible. 

The vote for the nomination to represent the profit 
sharers on the Board of Directors has recently been held, 
and resulted in the nomination of Mr. Miles Connors, and 
Mr. Connors was duly declared elected as a Director at 
the meeting of the Stockholders. 

Mr. Connors is a foreman in the street department. He 
is 46 years old and has been in the employ of the com- 
pany 23 years, beginning as a street laborer and rising to 
his present rank. He has been a profit sharer from the 
time the plan was started in 1906. Since that time he in 
common with the other profit sharers of the company who 
were eligible at that time has received to date 100% of 
his average annual wages, which has been invested in the 
preferred stock of the Massachusetts gas companies. 

Through Mr. Connors, whose popularity with the em- 
ployees is shown by his nomination by them as a director, 
the employees will have a direct medium through whom 
they can meet the directors of the company. 



PROFIT SHARING REPORT 39 

He will have access to all the costs and profits of the 
company each month. He will be able to present the 
point of view of the employees to the management of 
the company and to advise the employees whom he rep- 
resents as to the attitude of the directors of the com- 
pany. He will have a direct voice in the management of 
the company and will be consulted especially in matters 
affecting the interests of the employees. 

It is believed that the plan of the Boston Consoli- 
dated Gas Company of direct representation of the em- 
ployees on the Board of Directors will go far toward 
establishing happy conditions and friendly relations be- 
tween the management of the company and the emplovees. 

Amount of cash to credit of present profit 

sharers, October 1, 1919 $15,714.27 

Amount of preferred stock in Massachusetts 
Gas companies to credit of present profit 
sharers, 5,025 shares at market $65 326,625.00 

Total amount to credit of present profit 

sharers $342,339.27 

Average weekly wages, $18.44. 

Shares held October 1, 1919, 5,025; average number of 
shares held by present profit sharers, 6.13. 



Bourne Mills. 
cotton manufacture. fall river, mass. 1889. 

(1916) Every employee who continues faithfully at 
work during any term of six months is entitled to a share of 
the profits in proportion to the dividends paid to the stock- 
holders. The employee's share is in the form of a dividend 
on his wages, calculated by dividing a certain percentage (not 
less than six or more than twenty) of the amount paid to 
stockholders by the total wages of the employees entitled to 
share. The amount of each individual's wages is multiplied 
by this rate to determine his share. The directors vote every 
six months on the retention of the plan. The company has 
about 600 employees. 



40 THE NATIONAL CIVIC FEDERATION 

The plan is one of the oldest in the United States, having 
been in continuous duration since 1889, with the exception 
of the year 1904. The rate of dividend to employees has 
ranged from 2^9% to 7%. 

In May, 1915, an officer of the company stated: 

'We do not claim that the plan eliminates labor troubles, 
but we think it tends to minimize same. This system has been 
very satisfactory and we think it tends to keep our employees 
with us for longer periods than would otherwise be the case. 
Although our profit sharing plan has not accomplished all 
that we would wish, it has certainly helped us along in the 
right direction." 

An officer of the United Textile Workers of America ex- 
presses the opinion, based upon inquiries made, that "the 
employees do not appear to be carried away with the plan, 
there being rather too many restrictions around it in regard 
to their working steadily during the year, which is not always 
possible for a textile worker to do, having to lay off once in 
a while to recuperate. I cannot say that the plan is based on 
a low wage, that is to say, lower than that which prevails in 
other mills for the same class of work, although it is needless 
for me to say that the whole wage standard in this particular 
branch of industry is on a low basis. I would rather believe 
that the employees take this extra bit of cash given to them 
at the end of the year as a part of what they have really 
earned during the year but comes to them in bulk at this 
particular time.' 9 

(1919) Fall River "Herald," December 20: 

"The Bourne mills management paid today the cor- 
poration's sixtieth semi-annual profit sharing dividend to 
its employees. The amount was 6^2% on wages from 
June 7 to November 29, 1919. All employees in steady 
employment during the whole period or an appreciable 
part of it shared in the dividend. Both the rate and the 
total amount paid are the largest since the dividend was 
inaugurated. An employee in steady employ during the 
entire period received the equivalent of 1% weeks' wages. 
The general wage advance of 15% which went into effect 
June 2 last in all the mills here, was operative in estab- 
lishing the amount of dividend that an employee received. 
The rate of wages for the six months was the highest in 
the history of cotton manufacturing here, previous to the 
first of this month, when the latest general increase, 



PROFIT SHARING REPORT 41 

12%%, went into effect. The total amount paid out by 
the Bourne for the dividend was about $15,000. 

"This dividend was inaugurated in 1889 by the late 
George A. Chace, then treasurer and agent of the Bourne. 
The primary object was to offer an incentive to draw op- 
eratives to the plant and to keep them steadily at work. 
There has been one break in the continuity of the dividend. 
That was in 1904, when the memorable 'long strike' oc- 
curred, beginning July 25 and declared off January 18, 
1905. The dividend is called 'profit sharing', but it has 
been paid in some years when there were no profits." 

Canadian Cottons, Ltd. 
montreal. 

(1919) From a company circular: 

"During the past year the woven production at Ontario 
mill has been, in round figures, 64% of the rated capacity 
of the looms installed, while under proper conditions it might 
easily have been 80 to 85%. With this in view, it has been 
arranged that the company and its workers will share equally 
in the profits accruing from all increased production, and in 
direct ratio to such increase. Dating from October 1 next 
the company will pay to operatives, at the end of each suc- 
ceeding three months' period and at the same time as divi- 
dends are paid to shareholders, a sum equal to 1% of each 
operative's wages for every 1% increase of production ob- 
tained over and above the present average of 64%. For 
example, if production is increased to 75% of possible 
efficiency — that is, by 11% — each worker will receive the 
additional sum of 11% of regular wages earned, and so on. 
In order that operatives may at all times keep in touch with 
the production figures, same will be posted week by week on 
the usual notice boards as soon as compiled. The amount 
of wages earned under this partnership plan may, if so wished, 
be reinvested with the company, and upon all money so de- 
posited the company will pay interest at the same rate as the 
shareholders receive in dividends upon the common stock of 
the company — at present 6% — and should the dividend rate 
at any time be increased, this increased rate would be paid 
upon such money reinvested. Employees will have the 
privilege of withdrawing part or all of such deposits at any 
time, with accrued interest. In order to participate in the 



42 THE NATIONAL CIVIC FEDERATION 

proposed plan, the operative must have worked at least 
921/2 % of the full working time during the three months' 
payment period." 

Eastman Kodak Company, 
rochester, n. y. 1911. 

(1916) The company calls its profit sharing system a 
wage dividend plan and bases it on the assumption that divi- 
dends to common shareholders up to 10% are the equivalent 
of the employees' fixed wage, and that cash dividends in ex- 
cess of that figure may be fairly considered as extraordinary. 
The plan therefore provides that the dividends to wage- 
earners shall be based upon such extra cash dividends — that 
is, over 10% — paid to shareholders. 

In arriving at the proportion which shall go to the wage- 
earners, all the factors bearing upon the problem, including 
length of service, have been taken into consideration by the 
company and it has fixed the wage dividend at 35%' of the 
extra cash dividends paid to the holders of common stock. 
This is to be divided and applied on a period of five years. 

To illustrate the way in which this plan works out, the 
years of 1911, 1912 and 1913 may be taken as examples. 
The extra dividends to holders of common stock amounted 
to 30% ; 35% of 30% is 10%% ; this divided by 5 is 2.1% 
on each of five years' wages. Applying this formula, it will 
be seen that an employee who has worked for the company 
five years and has averaged $15 per week will receive $81.90 
— an amount equal to about five and one-half weeks' pay. If 
he has worked four years, he will receive $65.52, and so on 
down to one year, in which case he will receive $16.38. The 
dividends are paid on July 1, following the year in which they 
were earned. 

Only employees who have been on the payroll of the 
company for a full calendar year are considered, and con- 
tinuous service only is recognized. Piece-workers participate 
on the same basis as those receiving fixed wages or salaries. 

It is a rule of the company that no one who engages labor 
is permitted, in fixing wages, to take into account any wage 
dividends which may be or have been received by the em- 
ployee. 



PROFIT SHARING REPORT 43 

The payments to the employees under this plan have aver- 
aged about $500,000 a year. It is announced that the divi- 
dend in 1916 will, however, mount up to $1,000,000, and 
that about 8,000 of the 11,000 employees will participate. 
This is on the basis of a 17^2% dividend to employees of 
five years' standing, equivalent to nearly nine weeks' salary. 
For employees not more than one year in the service the divi- 
dend will be 3^/2%. 

(1919) The industrial relations department manager, 
September 10: 

"The plan in operation in 1916 is still in force. The 
results have been in general the cultivation of greater go 3d 
will toward the company on the part of the employees and 
an increase in the stability of the works force. Just how 
great a force the profit sharing arrangement has been in 
effecting this end is not known. However, we feel that it is 
a valuable factor in the development both of good will and 
stability. 

"In the Rochester factories and office we have at presant 
approximately 12,600 employees. Between 70 and 75% of 
these participate in the plan. 

"The employees look upon the wage dividend as a par- 
ticularly favorable factor in the term of employment. It is 
now looked upon as a regular feature, and the main interest 
of the employee seems to be in just how large the amount of 
his dividend will be. The tendency toward labor troubles 
and unrest has never been marked in this company. I think, 
however, that the wage dividend has been a factor in allaying 
possible disturbances. 

4 We have recently announced another sort of profit shar- 
ing, namely, a stock ownership plan which in no way inter- 
feres with the regular wage dividend paid yearly. Under 
this plan the employee is permitted to buy stock of the East- 
man Kodak Company at par. It extends to every employee 
of the company. The wage dividend plan is not unqualifiedly 
a success; there are many problems which arise in adminis- 
tration which remain to be solved. We are having no trouble 
with the fundamentals, but the practical execution of it must 
be further worked out. The last word has not yet been said 
in the matter of who should participate and what terms shall 
be made." 



44 the national civic federation 

Edison Electric Illuminating Company of Brooklyn. 

brooklyn, n. y. 1910. 

(1916) To those employees who have been in the com- 
pany^ service for two years, a percentage of their salary is 
given each year equivalent to one-fourth of the rate of divi- 
dends paid on the capital stock; to those in the service three 
years, a percentage equivalent to one-half the rate of divi- 
dends ; to those in the service four years a percentage equiva- 
lent to three-fourths of the rate of dividends and to those in 
the sendee five years a percentage equivalent to the full divi- 
dend rate. This money is deposited in the Brooklyn Edison 
investment fund to the credit of the employees benefited. The 
investment fund is used to buy stocks and bonds of the Kings 
County Electric Light and Power Company and the Edison 
Electric Illuminating Company of Brooklyn. 

Dividends are declared out of the earnings of the invest- 
ment fund and the employees participating may withdraw 
these dividends or have them credited. The sums credited to 
the employees in the fund itself, however, cannot be with- 
drawn within three years except to make payments upon the 
purchase of a home or because of death of the employee, or 
unusual necessity in the opinion of the committee in charge 
of the fund. Employees who are discharged for misconduct, 
or who leave the company's service without giving one month's 
notice, or who become insolvent, or who attempt to sell or 
encumber their interest in the fund without permission, for- 
feit all title to the sums credited to them in the fund. 

The committee in charge may, at its discretion, withhold 
a part or all of the profit to which an employee might other- 
wise be entitled. 

After three successive annual sums have been credited to 
an employee, he may, if he desires, take out stock in the com- 
pany to the amount of his credit for the first two years of the 
three-year period. 

Employees may make regular deposits in the investment 
fund, in addition to their profit sharing credits, and may 
withdraw such deposits at will. 

At the close of 1914 there were 1,080 individual accounts 
in the fund, and 109 employees owned 773 shares of stock 
outright. Out of the 1,745 employees of the company, 1,381 



PROFIT SHARING REPORT 45 

had savings invested in the fund, and of these 721 had author- 
ized weekly deductions from wages as deposits in the fund. 
The sum of $256,819.74 had been deposited in the fund 
through profit sharing, $370,379.37 through deposits of em- 
ployees, and $41,450.12 through dividends earned. 

The company considers the plan to have been a success. 
(1919) R. W. Allen, secretary, November 19: 
"The company's plan at present is the same as described 
in 1916. The average number of employees for 1918 was 
1,733. It is anticipated 993 will be included in the profit 
sharing roll for the year ending December 31, 1919. The 
plan has undoubtedly prevented a thought or tendency toward 
labor troubles. Both department heads and the rank and file 
participate. The plan has been an unqualified success both 
from the point of view of the employer and the employee. 

'We believe that the plan, which applies to all employees 
of the company, including officers, department heads and 
rank and file, is well thought of and has done much for those 
for whose benefit it was intended, and has been the means of 
increasing good will toward the company and the permanency 
of its employees. The fact that the plan has been success- 
fully maintained for ten years without any appreciable 
changes having been made in its structure and application is 
perhaps the best evidence of ite successful operation." 

Empire Trust Company. 
new york city. 

(1916) A certain percentage of net profits of the com- 
pany, which percentage rises with an increase of profits of 
the company upon a fixed ratio, is divided among the em- 
ployees yearly upon the basis of salary received, length of 
service and special merit, as measured by standards fixed 
from time to time by the officers. 

The company reports: "The plan is well received and we 
believe tends directly to promote efficiency and stimulate 
endeavor." 

(1919) Eugene Miller, assistant secretary, September 6: 

'We are still carrying out the profit sharing plan in exist- 
ence in 1916, and find that it has been very successful." 



46 the national civic federation 

Endicott-Johnson Corporation, 
leather and leather shoes. endicott, n. y. 

(1919) From a representative of the corporation, 
November 10: 

"Our profit sharing with our workers only started in 
April of this year; therefore, we are not able to answer any 
of your questions, except to state that as we never have had 
any labor disturbances the profit sharing has had no influence 
in this matter. However, it is a noticeable fact that our 
workers value their positions more highly and are very loath 
to leave them. 

,4 The worker may share in this plan after being in our 
employ only one year, and the highest paid and the lowest 
paid workers share alike; in other words, our theory is that 
the lowest paid is the one who needs the profit sharing the 
most." 

From the corporation's announcement to its workers, 
April 3, 1919: 

Due to our mutual efforts our leather and shoe business 
has grown from $600,000 to $75,000,000 annually, with 
possibilities for future development so great that we feel 
the business will be strengthened and the interests of all 
better guaranteed under the form of a corporation than a 
private ownership. 

Each year, after a 7% dividend has been paid on pre- 
ferred stock, and 10% set apart on the common stock, the 
balance of the profits, if any, shall be split 50-50 between 
the workers and the owners of the common stock. Every 
worker who has been in the employ of the company 
throughout the entire year will share and share alike, 
which means that the highest paid and lowest paid worker 
and all between, receive the same amount either in com- 
mon stock or cash, at the option of the directors. Divi- 
sions made once a year. Plan commences as of January 
1, 1919. First division as soon as possible after January 
1, 1920. . . . 

Any worker wishing to buy preferred stock in the new 
corporation paying 7% dividend, may apply before April 
14, 1919. . . . 

Press dispatches, March 1, 1920, announce the payment 
by this company of $2,505,286 "bonus" to 10,531 employees. 
Each worker received a company check for $237.90, which 



PROFIT SHARING REPORT 47 

amount could be claimed in money or common stock at 100, 
or part of either, at one's option. / 

Farr Alpaca Company. 

manufacturers of pure alpaca and mohair lustres. 

holyoke, mass. 1914. 

(1916) Employees who render satisfactory and con- 
tinuous service for 12 months receive a dividend on their 
year's wages at the same rate that is paid shareholders on 
their stock. This, at present, is 8%. The company has 3,000 
employees and the annual wage roll is about $1,800,000. 
The amount forfeited by the discharge of an employee, or 
by his leaving voluntarily, or by his exclusion on account of 
unsatisfactory service, is credited to a benefit fund out of 
which the directors of the company may grant assistance to 
aged or disabled employees. 

In its announcement to employees the company says: 
'This system of profit sharing is not offered as a substitute 
for normal advances in wages when conditions warrant." 
In January, 1915, after the plan had been in operation one 
year, a committee of employees presented a testimonial to 
the meeting of stockholders, expressive of their appreciation 
of the plan and its administration. In January, 1916, the 
directors voted to continue the plan another two years. 

(1919) Edward J. Meacham, secretary, September 4: 

"The profit sharing plan adopted by this company early 
in 1914 is still in force. The results have been eminently 
satisfactory, both to the employer and employee. 

"Our average number of employees is about 2,700. As 
outlined in the plan, those who leave the company's employ 
during the year are dropped from the profit sharing, so that 
at the end of the year there are considerably fewer hands, 
although the above number of 2,700 will not be lessened by 
more than two or three hundred, and inasmuch as the divi- 
dend upon the wages earned by those severing their connec- 
tions with the company during the year is credited to the dis- 
ability fund or old age pension fund, the company does not 
derive any benefit from wages paid employees up to time of 
resignation. 

"The feeling toward the plan by those for whose benefit 
it is intended is, we believe, very favorable. As regards elim- 



48 THE NATIONAL CIVIC FEDERATION 

inating or modifying the tendency toward labor troubles, we 
have had none since 1916. The plan is not limited to the 
heads of departments, but includes all employees. It is re- 
garded unqualifiedly as a success." 

A Furniture Company. 

(Name withheld by request.) 
WISCONSIN. 

The plan of this company was inaugurated four years 
ago. For the first year the percentage of profits, distributed 
arbitrarily, averaged about 10% on the payroll, and this 
basis of percentage has been continued. The amount of cash 
distributed therefore depends upon the profits. This fact has 
been stated every year to the employees in order to stimulate 
them to greater effort and bigger profits. While the percent- 
age has remained about the same, the amount of money dis- 
tributed has been about doubled, the increase being based on 
payroll. A new plan has been installed in 1920. About 200 
persons are employed, every one participating in the profit 
sharing after sixty days' employment. The system has a ten- 
dency to reduce the labor turnover. It is considered quite a 
success. 

General Asphalt Company. 

camden, n. j. 1916. 

(1916) This company has announced a profit sharing 
and pension plan for employees of the company and its sub- 
sidiaries. 

The profit sharing distribution will be made to all 
officers and employees receiving a salary of $60 or more a 
month, and who shall have been continuously in the com- 
pany's employ for one year or more prior- to the expiration 
of the fiscal year ending January 31, 1917. The rate of dis- 
tribution will be 1% of the salary of each employee for each 
$100,000 of net gain to surplus in the fiscal year ending 
January 31, 1917, over and above the amount required for 
the 5% dividend on the preferred stock. 

(1919) Ira Atkinson, treasurer, October 10: 

'There has been no change in our plans, which have, on 
the whole, worked out satisfactorily. The war, however, has 



PROFIT SHARING REPORT 49 

made such a considerable change in the personnel of our 
employees as to have robbed the plans of their full value and 
to make some modifications desirable when the situation has 
once more become normal." 

General Ice Delivery Company, 
detroit, mich. 1909. 

(1916) Five per cent of the annual net earnings of the 
company is distributed among the employees who have been 
with the company long enough to have earned a promotion. 

In July, 1915, the president of the company said: 

"Our profit sharing plan — 5% of the profits every year 
— ensures the receipt of something by our men if there are 
dividends. It therefore has a permanency which some other 
plans do not possess. The only shortcoming is the fact that 
some men receive profits who really are not worthy, but the 
men in our organization soon find that out and it has a whole- 
some effect upon those who are not really entitled to con- 
sideration." 

The total annual distribution, exclusive of commissions 
to wagon men, has increased from about $2,000 to $7,500. 
The company regards the plan as "a complete success and of 
a very permanent nature." 

(1919) In a letter dated August 8 President David A. 
Brown of this company writes: 

"It is my present belief that the only way in which the 
relations between capital and labor can be permanently 
solved, and solved so that there will be no injustice to either 
capital or labor, will be by either state or national legisla- 
tion." 

(1919) President Brown wrote further, September 23: 

''The profit sharing plan is still in force; the results are 
very satisfactory. No change or modifications have been 
made, although some rather radical changes have been made 
in our internal relation with our employees. The feeling 
toward the plan is very satisfactory. Labor troubles are 
minimum with the employees who participate in the plan; 
practically no turnover whatsoever; the classification covers 
a percentage of profits. The plan is applicable to those who 
have taken their first step forward in this company, no matter 



50 THE NATIONAL CIVIC FEDERATION 

how modest, and to all those who join with it in a semi-execu- 
tive capacity. We regard it as an unqualified success." 
In January, 1919, the company announced in a circular: 

The workers, the employees of the General Ice De- 
livery Company, the men who aid in the manufacture, 
distribution, and sale of Absopure, and those who handle 
its administrative details, will hereafter take a greater 
part in the management of this company . . . The 
workers of this company, the ice factory men, the wagon 
men, helpers, ice cutters, the collectors, the clerks — every 
person on the payroll — will have something to say directly 
or indirectly on how this big business is going to be 
run . . . The stockholders of the General Ice De- 
livery Company in their annual meeting recently went on 
record to define the new democracy in terms of industrial 
management. They decided that the men who in such 
large measure are responsible for the carrying on of this 
big business, should have such representation in the activi- 
ties of the company that will mean more to them than a 
mere pay check. . . . Two resolutions were adopted 
which will fundamentally change the policy of our or- 
ganization. These resolutions are: 

First: Increase of the board of directors from seven 
members to fifteen members, the eight additional members 
being elected from the working force of the organization 

Second: The creation of an "Inner Council" of dele 
gates from the employees of every department in the com 
pany, which shall have powers to recommend and admin 
istrate in matters pertaining to the welfare of the em 
ployees and their relationship with the company, the 
public and with their fellow employees. 

Guaranty Trust Company of New York. 

NEW YORK. 

(1919) E. M. Bentley, office manager, November 12: 
'This company adopted a profit sharing plan January 1, 
1919, in which all employees, numbering about 3,000, will 
participate. As this is the first year of its operation, it is 
impossible to yet measure its success, but there seems to be 
a general feeling among the employees that it will prove satis- 
factory. 

'While I think there is usually a rather natural tendency 
on the part of the employee to prefer full compensation in the 
pay envelope, we feel that the benefits of a profit sharing 
plan in accumulating a sum which the employee would un- 



PROFIT SHARING REPORT 51 

doubtedly not save from weekly or monthly earnings will be 
much appreciated when its value is realized, either as a per- 
manent saving or its availability for some special object. It 
should also result in employees having a keener interest in 
the proper operation of a business in the profits of which they 
are to share." 

Houghton Mifflin Company, 
boston, mass, 1872. 

(1916) The company maintains a savings department, 
for the benefit of the employees, in which deposits can be 
made at any time in any sum up to $1,000. Whenever on the 
first of January of any year the deposits of any depositor 
equal or exceed $100 and remain one year thereafter, the 
company agrees to pay to such depositor a portion of the 
annual profits not exceeding 4% additional on each $100. 

The number of depositors averages from one-third to one- 
half of the company's 1,000 employees. The company re- 
ports that the system has worked well for all purposes, has 
bred habits of care and economy and created a cordial feeling 
between it and the employees. This is one of the oldest profit 
sharing plans in the United States. 

(1919) James Duncan Phillips, treasurer, November 14: 

'We have had in operation at the Riverside Press, Cam- 
bridge, for a great many years a savings department in which 
the employees could put such sums of money as they desired 
and on which the company guaranteed 6% interest. At the 
end of various successful years considerable distributions of 
profits have been made so that at times the return has been 
very much larger than 6%. These dividends have been de- 
cided upon by the board of directors. 

"Of the 700 employees in our plant only about 200 take 
advantage of this plan, and frankly we do not feel at all sure 
whether this has been of any special benefit in labor troubles. 
In fact, it struck us as rather curious that at the time of a 
strike at the bindery some ten or fifteen of the persons who 
had from $50 to $1,000 deposited in this department should 
be walking up and down in front of the plant as pickets on 
strike, although, curious enough, they never drew their money 
from the department, which they might have done at any 



52 THE NATIONAL CIVIC FEDERATION 

moment. The aim of the department was naturally to secure 
the good will of the people and to furnish them an oppor- 
tunity to safely invest some of their savings. The best em- 
ployees take advantage of it; the others as a general rule 
do not." 

The Hub. 
clothing house. chicago, ill. 1891. 

(1916) A percentage of the profits is distributed among 
employees who have been with the company two years or 
more, the rate increasing with each year of employment and 
the amounts ranging from $15 to $500. The store employs 
about 700 people. 

(1919) George Lytton, vice-president, October 9: 

"The plan has been in force about 25 years. When we 
began we did not know of any other firm in the retail business 
doing likewise, and felt at the time that we were making a 
very wise move. I have been actively engaged in the business 
for the past 25 years and therefore am fully qualified to point 
out that I believe the plan as carried out by us is of very little 
value, other than the advertising feature. 

"Profit sharing is a misnomer, this title having been 
tacked on by the papers in its incipiency and having remained 
with us ever since. We began by giving a week's salary the 
first year and after that an increase yearly, the bonus or 
present depending upon the length of service, making an extra 
gift of $500 when any one had been in our service 20 years. 
A number have received this special gift. 

"I believe thoroughly in the real profit sharing system 
and approve heartily of the views set forth by Mr. Perkins 
in his pamphlet on this subject. I do not hesitate to say that 
were the matter in my own hands, I would work out ultimately 
some satisfactory real profit sharing plan. 

'We have about 700 employees. There has been no 
change since 1916. When the money is received at Christmas 
time by the employees, the writer believes it is forgotten in 
about 24 hours. 

'There have never been any labor troubles in our busi- 
ness. I do not believe it is due to the profit sharing plan, but 
to our close, personal contact with our employees. The only 



PROFIT SHARING REPORT 53 

union we have is in the tailor shop, which was unionized four 
years ago and which the writer believes is entirely indepen- 
dent from the rest of the store organization, doing about as 
they please, except for the control held over them by the 
union. The heads of the departments receive a special pres- 
ent which the balance of the store have nothing to do with — a 
personal matter with each head." 

The Keystone Driller Company, 
beaver falls, pa. 1906. 

(1916) This plan has also savings and stock subscrip- 
tion features. 

Employees may deposit on pay day any amounts they 
desire, which immediately begin to draw interest. After the 
expiration of six months, if the owners so desire, the deposits 
become profit sharing accounts upon an equality with invested 
capital. The company, however, guarantees that the profit 
shall never be less than 6%. Deposits may be withdrawn 
on any regular pay day. 

Profit sharing certificates amounting to $50 or over may 
at any time be exchanged for regular corporation stock at par. 

Employees cannot hold profit sharing certificates in excess 
of $1,000; but if, having reached this amount, the certificates 
are exchanged for corporation stock, the employees begin 
deposits anew. Ownership of profit sharing certificates of 
$50 or over entitles the owner to preference of employment 
as vacancies may occur, but "in case the owner joins in any 
hostile strike against the company, profit sharing or interest, 
as the case may be, shall immediately and permanently 



cease. 



The company reports that the plan has established a com- 
munity of interest, raised the efficiency of the workmen, elim- 
inated floaters and reduced strikes. 

(1919) The company reports: "We are not now using 
a 'profit sharing plan.' The men abused the privilege of 
transferring the preferred stock to common stock and sold 
out at a profit, thus themselves defeating the 'profit sharing' 
features of the plan." 



54 the national civic federation 

Kutztown Foundry and Machine Company, 
philadelphia, pa. 1914. 

(1916) A part of the nee profits is distributed among 
the employees in proportion to their salaries or wages, the 
total amount being determined by the executive committee 
after a dividend has been declared of not more than 8% on 
the capital stock. 

Payments are made quarterly to employees who remain 
in the service continuously during that quarter, but those dis- 
missed for lack of work are allowed their proportionate share 
on whatever wages they have earned. 

Employees receive their profits through their departments 
and the allotment of a department is reduced by the amount 
of any expense incurred by the company to replace defective 
workmanship and materials caused by the carelessness of the 
employees in the department. 

(1919) The company reports, October 11: "We do 
not have in force at the present time a profit sharing plan 
in which all of our employees participate. We did have 
such a plan in force a few years ago, the details of which 
were given you at that time, but the management has con- 
cluded that the plan has not worked out successfully, inas- 
much as it did not accomplish the results we had hoped to 
obtain. The plan, therefore, was abandoned." 

The National Bank of Commerce in St. Louis. 

ST. LOUIS, mo. 1900. 

(1916) At the end of each year the net earnings of the 
bank are ascertained and after deducting losses and a sum 
equal to 6% of the capital, surplus and undivided profits, 
6% of the remaining net profits is set aside for an employees' 
pension fund, and 4% for an employees' participation fund. 
The participation fund is distributed in cash at the end of 
each year among the officers and employees in proportion to 
their salaries. The board of directors reserves the right at 
any time to discontinue the appropriations. 

(1919) A. L. Weissenborn, October 9: 

"For several years prior to 1912 we had such a plan in 
operation. In 1912 the amount then on hand was distributed 



54 THE NATIONAL CIVIC FEDERATION 



Kutztown Foundry and Machine Company. 

""it Am?T TJT4TA PA. 1914. 






istf 
m™ 

—a 



nr r . 

dn 



rs. 



con- 

and 

tner 

jrial, 



a 



For several 



operation. In 1912 the amount then on hand was distributed 



PROFIT SHARING REPORT 55 

among the employees of the bank and since then we have dis- 
tributed no profits, further than an annual bonus of from a 
month to a month and a half's salary." 

National Cash Register Company, 
dayton, ohio. 

(1920) February 28, a new profit sharing plan was 
announced by this company which provides for the division 
of the company's profits into two equal shares after 6% on 
the company's investment has been deducted. One share will 
go to the company and the other will be divided among the 
employees. Of the latter share one-half is to be allotted to 
the management exclusive of the owners and one-half to all 
other employees at Dayton. The managing employees num- 
ber more than 500. An employee begins sharing profits after 
six months of service. The profits are to be determined by a 
disinterested outside firm of accountants. 

The profit sharing plan was originally started by this 
company in January, 1917, on a small scale. From time to 
time changes were made and the plan extended to include 
more employees. At the present time all of the 6,500 em- 
ployees at Dayton are on the profit sharing roll. The exact 
plan was put into effect January 1, 1920. 

President John H. Patterson, in announcing the plan to 
the employees, said: 

"On behalf of the owners of this company I wish to an- 
nounce the profit sharing plan which has been adopted for 
N. C. R. employees for the year 1920. 

"The plan which has been adopted will cover the period 
from January 1, 1920, to December 31, 1920, inclusive. All 
employees of the National Cash Register Company will par- 
ticipate in the net profits of the company in accordance with 
the following plan: 

'The profits of the company will be determined by a dis- 
interested outside firm of accountants. 

"After the net profits have been determined an amount 
equal to 6% interest on the company's investment will be 
deducted. 



The profits of the Company 
will be determined by a disin- 
terested outside firm of 
accountants. 



After the profits have been 
determined, an amount equal 
to 6% interest on the Com>- 
pany's investment will be de- 
ducted. 



The Company's share is for 
the purpose of 

1. Maintaining, sustaining, 
and increasing the business. 

2. Building new buildings. 

3. Buying new machinery and 
equipment. 






Employees' share is to be 
divided into two parts: 

1. One half, or 25% of the 
distributed profits, for the 
management exclusive of 
the owners. 

2. One half, or 25% of the 
distributed profits, for all 
other employees at Dayton. 



The employees who make up 
the management, exclusive of 
the, owners, who will receive 
25% of the distributed profits 
are: 



1. Class "A," comprising the 
executives and supervisors, 
consisting of 35 or more 
employees, will receive 

12%. 

2. Class "B," comprising fore- 
men, consisting of 85 or 
more employees, will re- 
ceive 5%. 

3. Class "C," comprising job 
foremen and other employ- 
ees holding equal positions, 
consisting of 400 or more 
employees, will receive 8%. 



All other employees at Dayton 
are to be divided into two 
classes: 

1. Class "D," comprising all 
other employees at Dayton 
who have been in the em- 
ploy of the Company for 
30 days or longer will re- 
ceive 25% of the distrib- 
uted profits. 

2. Class "E," comprising all 
employees who have been 
with the Company less than 
30 days. 



1. Distribution of all profits 
will be made semi-annually, 
as soon as possible after 
July 1, 1920, and Decem- 
ber 31, 1920. 

2. All profits distributed 
among employees of any 
class will be distributed in 
proportion to the wages or 
salaries received for the 
six months' period. 

3. Profits will be paid only on 
regular profit-sharing dates. 

4. No employee will receive 
profits unless he has been 
with the Company six 
months or more after be- 
coming a profit sharer. 

5. Any profits to which he 
may then be entitled will 
be paid at the next distri- 
bution of profits. 



It is hoped that this plan wiii 
accomplish the following 
results : 

1. Promote thrift. 

2. Reduce labor turn-over. 

3. Create closer co-operation. 

4. Increased efficiency for 
1920. 

5. Put yoor heart into your 
work. 

6. Create incentive for pro- 
motion-. 

7. Create better living con- 
ditions. 

8. Increase production and 
decrease costs. 

9. Make every one a partner 
in the business. 

10. Prevent waste of n - - 
time, and Labor. 



PROFIT SHARING REPORT 55 

among the employees of the bank and since then we have dis- 
tributed no profits, further than an annual bonus of from a 
month to a month and a half's salary." 

National Cash Register Company, 
dayton, ohio. 

(1920) February 28, a new profit sharing plan was 
announced by this company which provides for the division 
of the company's profits into two equal shares after 6% on 
the company's investment has been deducted. One share will 
go to the company and the other will be divided among the 
employees. Of the latter share one-half is to be allotted to 
the management exclusive of the owners and one-half to all 
other employees at Dayton. The managing employees num- 
ber more than 500. An employee begins sharing profits after 
six months of service. The profits are to be determined by a 
disinterested outside firm of accountants. 

The profit sharing plan was originally started by this 
company in January, 1917, on a small scale. From time to 
time changes were made and the plan extended to include 
more employees. At the present time all of the 6,500 em- 
ployees at Dayton are on the profit sharing roll. The exact 
plan was put into effect January 1, 1920. 

President John H. Patterson, in announcing the plan to 
the employees, said: 

"On behalf of the owners of this company I wish to an- 
nounce the profit sharing plan which has been adopted for 
N. C. R. employees for the year 1920. 

'The plan which has been adopted will cover the period 
from January 1, 1920, to December 31, 1920, inclusive. All 
employees of the National Cash Register Company will par- 
ticipate in the net profits of the company in accordance with 
the following plan: 

'The profits of the company will be determined by a dis- 
interested outside firm of accountants. 

"After the net profits have been determined an amount 
equal to 6% interest on the company's investment will be 
deducted. 



56 THE NATIONAL CIVIC FEDERATION 

'The remaining profits will be divided into two equal 
shares, 50% to go to the company and the remaining 50% to 
be divided among the employees as their share of the profits. 

'The company's share of the profits is for the purpose of 
maintaining, sustaining and increasing the business, building 
new buildings, purchase of new machinery and other equip- 
ment, and the maintenance of its present buildings, machinery 
and equipment. 

'The profits to be distributed among the employees will 
be divided into two parts, one half (25%) to the manage- 
ment, exclusive of the owners, and one-half (25%) to all 
other employees at Dayton. 

'The employees who make up the management, exclusive 
of the owners, are Class 'A,' comprising the executives and 
supervisors, consisting of 35 or more employees, who will 
receive 12% ; Class 'B, 9 comprising foremen, consisting of 85 
or more employees, who will receive 5% ; Class 'C,' compris- 
ing job foremen and other employees holding equal positions, 
consisting of 400 or more employees, who will receive 8%. 

"Class 'D' comprises all other employees at Dayton who 
have been in the employ of the company for 30 days or 
longer, who will receive the remaining 25% of the distributed 
profits. 

"Class 'E* comprises all employees who have been with 
the company less than 30 days. Class E members do not 
receive a share of the distributed profits. 

"Profits of each class will be distributed in proportion to 
the wages or salaries received for the six months period. 

'"Distribution of all profits will be made semi-annually, 
as soon as possible after July 1, 1920, and December 31, 
1920. Profits will be paid on regular profit sharing dates. 

"No employee will receive profits unless he has been with 
the company six months or more after becoming a profit 
sharer. Any profits to which he may then be entitled will be 
paid at the next distribution of profits. 

'The directors of this company have put this plan into 
effect because they feel it is right to share the profits with 
those who have helped make them. 

"It is the desire of the company at all times, independent 
of the profit sharing plan, to pay to all employees a salary 



PROFIT SHARING REPORT 57 

or rate at least equal to the high prevailing rate in this section 
of the country for like lines of work. 

"It is hoped that this plan will accomplish the following 
results: (1) Promote thrift; (2) increase efficiency; (3) re- 
duce labor turnover; (4) put heart into the work; (5) create 
closer co-operation; (6) make better living conditions; (7) 
create incentive for promotion; (8) increase production and 
decrease costs; (9) prevent waste of material, time and labor; 
(10) make every one feel like a partner in the business." 

New Albany Veneering Company, 
new albany, ind. 

(1919) The company, having in November, 1919, 
about 275 employees, the force to be increased January 1, 
1920, to about 350, began operating a plan April 1, 1919, the 
beginning of its fiscal year. Every one on the payroll of the 
company except the president is a participant. Its method 
of allocating surplus profits was thus announced: 

"Each year, after 10% has been set aside on the capital 
stock of the company, the balance of the profits, if any, shall 
be divided fifty-fifty between our employees and the stock- 
holders." (Pamphlet.) 

Newton and Watertown Gas Light Company. 

newton, mass. 

(1919) W. A. Learned, president, writes, November 28, 
that the company has had profit sharing for about two years, 
all employees with the company for a year participating. 
A percentage of the dividends equal to that paid the stock- 
holders is accorded to the employees in preferred stock, not 
to be sold without the consent of the company. All the per- 
sonnel except the president participate. 

Mr. Learned adds: "To make the profit sharing system 
a success you must pay the fullest living wage and have the 
profit sharing system a bonus pure and simple." (Pamphlet.) 



58 THE NATIONAL CIVIC FEDERATION 

NOBLESVILLE HEAT, LlGHT AND POWER COMPANY. 

INDIANAPOLIS, IND. 

(1919) Alex. R. Holliday, November 14: 
'The profit sharing plan of this company, which was 
adopted June 9, 1916, was modeled after the Brooklyn Edi- 
son Company. All employees, with the exception of officers, 
are included. Money set aside for profit sharing is turned 
over to the fund managed with certain rules by the employees. 
The amount turned over to the fund is based on the declared 
common stock dividend from operation. Employees in serv- 
ice six months have credited to them percentage on their 
wages equivalent to one-fourth the rate of dividend for the 
same period that the dividend coveifs. Those one year in 
service have one-half the rate of dividend, and those two 
years in service three-quarters rate of dividend, and those 
three years or more in service the same rate as the dividend. 
Dividends were paid up to the first half of 1918, since which 
time none has been declared. About 20 employees partici- 
pate in the dividend. 

"The feeling of a few toward the fund has always been 
very good, but the others were indifferent. In the last two 
years, on account of there being no dividends and on account 
of the shifting of labor, there has been very little interest in 
it. We believe it has been somewhat beneficial toward 
alleviating labor troubles. 

"It is not an unqualified success. The amount which the 
employees receive, viz., about 6% on wages, is apparently 
not enough to make it a decided factor. The general restless- 
ness of labor has been more in mind than the profit sharing." 

Norriton Woolen Mills. 

(j. morton brown & co,, proprietors) norristown, pa. 

1887. 

(1916) Percentage of profits, according to length of 
service, by agreement. Company enthusiastic at the time of 
publication by N. P. Gilman (1889). 

(1919) No reply to inquiries. 



profit sharing report 59 

Orton & Steinbrenner Company, 
material handling machinery. chicago, ill. 

(1919) P. A. Orton, November 11: 

"At our plant at Huntington, Ind., we have been using a 
profit sharing arrangement for five years. This is still in 
force. We employ about 300 men. As far as we are able 
to ascertain the general feeling is that the arrangement is 
satisfactory both to the stockholders and the employees. 
In our opinion it has been the means of keeping away labor 
troubles. We have always had a sufficient force of men, even 
during war times. Our profit sharing is not limited to any 
class but is participated in from the president to the office boy. 
We would not state that it is an unqualified success. We 
still do not obtain everything that we would like to. We do 
feel, however, that it has been a great advantage to us. 

"In general our system consists of reserving 7% for the 
invested capital and dividing one-half the balance among all 
employees. They share in direct proportion to the wages or 
salaries which each has received during the year, except that 
each employee shares to the extent of the wages earned 
whether he has worked the full vear or not and whether dis- 
charged for cause or leaving of his own accord. Practically 
the only reservations are that he shall have worked 600 hours 
during the year under consideration and that he shall give 
two weeks' notice to party in charge over him of his desire 
to quit, provided he does so. In dividing up employees' 
share, each employee's wages are multiplied by a coefficient 
depending upon the length of time in service. Those em- 
ployed after July 1 of the year under consideration have 
wages multiplied by 1; those employed before first of the 
year in question have their wages multiplied by 1.1, those in 
the employ on or before January 1 of the preceding year 
have their wages multiplied by 1.2 and so on until 1.5 is 
reached. The employees' share of the profits is then divided 
among them in strict proportion to the profits. A formal con- 
tract is made, a new one being arranged the first of each year. 
During the time which the arrangement has been in operation 
the employees' share of the profits has averaged from 7% 
to 194% of their actual earned wage." 



60 the national civic federation 

The Outlook Company, 
new york city. 1901. 

(1916) When the profits on the company's business 
have been determined at the end of the fiscal year, a certain 
percentage is paid to employees, the distribution being based 
on a certain percentage of each individual's wage or salary. 
The average number participating has been about 60, in a 
total average force of about 70. 

The company reports: 'We believe that this plan has 
proved a success in every way. It is greatly appreciated by 
all our employees, and we believe has increased their individ- 
ual loyalty and efficiency." 

(1919) Frank C. Hoyt, treasurer, September 11: 

"There has been no change whatever in our own plan 
since giving information regarding it in 1916, and the aver- 
age number of employees remains about the same. We re- 
gard profit sharing as an unqualified success, and we shall 
certainly continue it as long as there are any profits to share." 

Peninsular Paper Company, 
ypsilanti, mich. 1914. 

(1916) The employees are eligible who have been with 
the company for one year and whose services are satisfactory. 
These employees receive a wage dividend on the actual year's 
wages, reckoned at the same percentage as the shareholders 
of the company receive in dividends on their stock. 

Employees who are discharged or whose services are un- 
satisfactory lose all claim to share in the profits, and the 
amount which is thus forfeited to the company is credited to 
a benefit fund for aged and disabled employees. The com- 
pany states that the object of the plan is to lead the employees 
"to exercise the greatest possible care to guard against poor 
work and waste of time and material." 

(1919) The company reports, September 13: 

"Our profit sharing was started in April, 1914, and was 
continued through 1915. We are a union mill and found 
that the union preferred to adjust their own wage scale rather 
than participate in the profits, so in 1916 the plan was dis- 
continued. We found it worked much more successfully with 
the office force than with the mill labor." 



profit sharing report 61 

The Pittsburgh Trust Company. 

(Pittsburgh "Dispatch," November 29, 1919.) 

"The Company will, to encourage thrift, urge that all 
employees set aside at least one-half of their share of the 
earnings allotted to them to be invested in the stock of the 
company or some other security. 

"From the net profits for the year there shall be de- 
ducted an amount equal to 7% of the capital, surplus and 
undivided profits as of the first day of January of the cur- 
rent year; 15% of the residue of the net profits shall be 
appropriated as the share of the profits in which employees 
shall participate. 

"The fund so created shall be allotted to the respec- 
tive employees upon the following basis: 60% of the fund 
shall be distributed in the proportion that the salary of 
each officer or employee bears to the total salaries paid: 
40% shall be distributed in such proportions as the 
monthly salary multiplied by the years of service bears to 
the total of such amounts for all employees who shall par- 
ticipate in the fund. The total obtained from the two 
computations shall be the amount due to each officer or 
employee as their proportion of the profit sharing fund 
for the year. Payment of the proportionate amount due 
each officer or employee shall be made during the follow- 
ing vear, one-half on January 1 and the balance on 
July 1." 

The Rosenbaum Company, 
dry goods. pittsburgh, pa. 

(1919) M. Rothschild, president, November 12: 
,4 We have had profit sharing plans in operation with our 
buyers for quite a number of years. 

"We introduced profit sharing in a number of our depart- 
ments with the selling force three years ago, which, however, 
did not work out satisfactorily. We have again introduced 
early this year a profit sharing plan with the selling force in 
every department and we have every reason to believe that it 
works very satisfactorily. There is no doubt, however, that 
the plan can still be further improved, and only experience 
and time will tell both to us and to our employees how the 
plan can be made still more satisfactory to all. 

"We are also introducing now for our entire non-selling 
force, and that includes our entire office force, receivers, stock 



62 THE NATIONAL CIVIC FEDERATION 

clerks, porters, in fact everybody without exception, a profit 
sharing plan which we hope will be received and will work 
to the satisfaction of everybody concerned. 

,4 The average number of our employees is about 2,000 
and all participate in the plan. 

'The feeling of those who benefit by the plan is a very 
good one. We are happy to say that we have had very little 
labor trouble in our establishment, firstly because the help 
associated with us is of a much higher class and type, and 
secondly, we have always tried to meet them half way and 
we believe we have succeeded in surrounding ourselves with 
satisfactory, loyal people." 

R. F. Simmons Company. 

MANUFACTURING JEWELERS. ATTLEBORO, MASS. 1902. 

(1916) The employees who have rendered faithful serv- 
ice for at least three consecutive months are permitted to 
participate in the profit sharing fund, which is determined as 
follows : 

Not less than 8% nor more than 12% of the dividend 
paid the stockholders is divided by the total amount of 
wages paid all employees. The percentage thus obtained 
constitutes the rate of dividend to the employee upon his 
salary for the year. Employees desiring to participate are 
required to sign a card agreeing, among other things, "to 
be on the pay roll three consecutive months and not to 
leave our employ voluntarily, or to be discharged for in- 
competency, or disobedience of orders." 

The company reports that there has been produced a 
greater spirit of co-operation between the employer and the 
employee, but that from the nature of their business they have 
been able to make no tangible estimate of the increased 
profits. With the adoption of the plan the Christmas distri- 
bution of the two previous years was discontinued. 
(1919) H. E. Sweet, October 17: 
'This plan, which has been in effect since 1902, has not 
been materially changed. Practically the only change has 
been to insure an increase in the percentage of the employees' 
dividend, which in 1918 reached approximately 20% of the 
yearly wage and which we hope to increase this year. 



PROFIT SHARING REPORT 63 

"While no plan is a panacea for all industrial ills, yet we 
have felt that our policy in this respect has been a material 
factor in securing loyal and interested co-operation in the 
production of Simmons chains. Furthermore, this loyalty 
was put to a severe test in August, 1918, when a general 
strike occurred in the jewelry business here and only four 
(one man and three women) out of some 200 employees re- 
sponded to the strike call, the rest remaining at work during 
the period of the strike, some ten days, despite the fact that 
by far the majority of the jewelry employees of this city went 
out on strike and in the face of vigorous and persistent picket- 
ing of our plant." 

Simplex Wire Cable Company, 
boston, mass. 1901. 

(1916) A definite percentage of each year's profits is 
divided among employees who have been with the company 
at least one year and whose services are satisfactory. This 
percentage is fixed in advance but is not publicly announced, 
for reasons of general business policy. The eligible em- 
ployees share in proportion to their wages earned during the 
year, but not more than 20% will be paid under any cir- 
cumstances. Since the dividends are not payable until March 
of the year following that in which they are earned, the em- 
ployee must have been in the service 26 months before receiv- 
ing his first actual payment. 

The dividends paid have ranged from 7 to 18-^2% on 
the wages earned. The employees number about 550, a large 
proportion of whom are not in the company's employ a suffi- 
cient length of time to share in the profit distribution. 

The president of the company states that the payment of 
the dividends in a lump sum annually has the effect in most 
cases of inducing employees to save or to invest the money in 
permmanent home improvements. As to the general results 
of the plan, he says: "Our profit sharing was started not as 
a charity but as a business move, and after twelve years' 
experience we are convinced that it has contributed to our 
financial welfare as well as to our satisfaction in the conduct 
of the business." 



64 THE NATIONAL CIVIC FEDERATION 

(1919) Everett Morss, president, September 25: 
"Our profit sharing plan is still in force and going along 
about as usual and no particular changes have been made in 
it since 1916. It continues to be satisfactory to us and we 
believe it is satisfactory to our employees. We include all 
employees who have been in our service a sufficient length 
of time, except a few officials. While our plan has been in 
successful operation for 18 years, we believe that its success 
is partly due to special conditions and are by no means of 
the opinion that its general adoption will solve all present 
labor troubles." 

Stambaugh-Thompson Company, 
wholesale hardware dealers. youngstown, ohio. 1913. 

Out of the net profits remaining at the end of the fiscal 
year there are first deducted fixed amounts representing a 
fair return on the capital invested in the business. One-half 
of the balance remaining after such deduction is distributed 
in cash among all the employees in proportion to their wages 
as shown by the payroll. About 100 employees participate. 

The term "profits" as used by the board of directors in 
establishing the system, means "all profits which the em- 
ployees, by their services, help to create, but does not include 
profits which accrue without any effort on their part, such as 
profits on the sale of real estate, stocks or bonds owned by 
the company, whether of this or other corporations, nor does 
it include rent from lands or buildings owned but not used by 
the company in its business." 

The company states that it considers the plan a success. 

(1919) In September this company published the fol- 
lowing information: 

In order to qualify as a genuine profit sharing plan, 
the following conditions must be observed: 

(1) The amount distributed depends entirely on 
profits made in the business. 

(2) The proportion to stockholders and to employees 
must be announced in advance. 

(3) Benefit must extend to at least one-third of all 
employees. 

(4) Method of distribution must be known to all. 
Our six years' experience has convinced us — 

(1) That salaries must in every case equal those paid 



PROFIT SHARING REPORT 65 

elsewhere for similar service. Otherwise the plan is not 
a profit sharing but a deferred salary plan. 

(2) Employees should all participate, otherwise the 
organization will be divided into cliques. 

(3) The percentage of division must be liberal fo the 
employees. Otherwise the amount divided is not great 
enough to make it worth while to the employees. 

(4) Employees must have absolute confidence in the 
management. Unless men at the head are above suspicion, 
are fair and honorable, their motives will be distrusted 
and the proper esprit de corps cannot be instilled. 

The greatest difficulty in operating a plan like this 
successfully, that is, getting results commensurate with the 
cost, is in proving to the employees that the management 
is fair and just. This is due to faulty American training, 
to the influence of those who desire to promote class feel- 
ing, and to want of discipline. However, if the manage- 
ment is patient, is kind and just, it will in a few years (1) 
promote efficiency; (2) cut down labor turn-over; (3) and 
capitalize the greatest asset there is, the good will of all 
employees, their families and their friends. 

Bernhard Stern & Sons. 
flour millers. milwaukee, wis. 1914. 

(1916) At the end of the fiscal year, on September 1, 
a certain definite percentage of the net profits is placed to the 
credit of a fund known as the employees' profit sharing fund. 

On November 1 all employees who have been in the firm's 
employ one year (except those in the selling department) 
participate in such proportion as each employee's wages or 
salary for the preceding year shall bear to the entire amount 
paid for wages and salaries during that period to such em- 
ployees. Of the 86 employees of the firm, about 65 par- 
ticipate. 

The firm considers the plan a success. In announcing it 
to their employees, the objects were explained as follows: 

"The purpose of the employees' profit sharing fund is 
not alone to enable each employee to share in a propor- 
tion of the net profits earned by the firm, but also to be 
an additional incentive for each employee to give the 
maximum of service to the firm. Each and every em- 
ployee, no mater what his duties may be, can, through 
his own effort, aid and assist in a greater return of net 
profits to the firm, and it is hoped that each employee will 
keep this constantly in mind, and endeavor to co-operate 



66 THE NATIONAL CIVIC FEDERATION 

with the heads of departments and the members of the 
firm, in realizing the largest return possible in our mutual 
endeavor." 

(1919) Walter Stern, president, October 9: 
"Our profit sharing plan is still in force, and on the whole 
the results are satisfactory. The average number of our 
employees is 120, and as a rule about 75 participate in the 
distribution. No change or modification has been made in 
our plan since 1916, and we believe that the feeling by those 
who benefit from it is satisfactory. While it is difficult to say 
what effect the profit sharing has had as a means of eliminat- 
ing or modifying the tendency toward labor troubles, it is 
considered that it has been an important factor in this regard. 
Our plan does not limit participants to heads of departments 
but includes all employees. While it can be termed by us a 
success, there are some discouraging features during the pres- 
ent period of big demand for all sorts of labor in that in 
several instances men have left our employ immediately after 
the distribution of the profits. This has been done to a 
greater extent recently than formerly." 

Storrs Mica Company, 
mica chimneys and canopies. owego, n. y. 

(1919) A. P. Storrs, president, November 12: 
"Tn January, 1917, we introduced a form of profit shar- 
ing by paying to our employees, numbering about 100, who 
had been at work for us two years or more, an additional 
compensation of a percentage on their wages earned during 
the year equal to the percentage of dividend declared on our 
stock for the year 1916. Those who had been with us less 
than two years received an amount equal to one-half the per- 
centage of the dividend declared. The percentages were for 
1916 and 1917 10% and for 1918 8%. Our normal number 
of employees for several years has been from 100 to 125. 
During the last year, owing to the scarcity of labor, this num- 
ber has been reduced to from 60 to 75. This arrangement 
has been satisfactory to our employees in every way. Many 
of them have been in our employ from eight to ten years. 
We have never experienced any labor troubles. A consider- 
able part of the additional compensation was invested by 



PROFIT SHARING REPORT 67 

our employees in the various issues of the government bonds. 
All of our employees, outside of the officers, participate in 
the distribution." 

Sweet, Causey, Foster & Co. 

INVESTMENT BANKERS. DENVER. 

(1919) The firm sets aside 50% of its net profits to be 
divided among its salaried workers. Three-fifths of the 50% 
is invested in securities as determined by the company, and 
two-fifths is paid in cash. The basis of participation in the 
profits is the amount of salary and term of employment, there 
being six classifications. The average number of employees 
is 40 to 45. The feeling toward the plan is reported to be 
cordial. The company is not yet decided as to whether it is 
a success, as it went into operation only on April 1, 1919. 

The W. S. Tyler Company. 

MANUFACTURERS OF WIRE CLOTH AND MINING SCREEN. 

CLEVELAND, OHIO. 1915. 

(1916) After 6% has been paid on the capital stock, 
all cash dividends are divided between the stockholders and 
employees as follows: 

(1) Employees in the service of the company for three 
years or more receive same percentage as do stockholders. 

(2) Employees in the service for two years but less than 
three years, two-thirds of the rate of cash dividends. 

(3) Employees in the service for six months but less than 
two years, one-third of the rate of cash dividends. 

Dividends apply to all employees and are based on the 
total amount of wages paid to each employee. Employees 
discharged, or leaving the company's service voluntarily, 
forfeit their right to share in any dividends, but those laid 
off for lack of work share in proportion to the wages they 
have actually earned. 

(1919) C Zimmerman, secretary, September 11: 
"Our plan is still in force in practically the same form 
as in 1915, the only change being in regard to the length of 
time employees are required to be in the service to share in 
dividends. The employees now participate in full dividends 
after one year instead of three Years. 



68 THE NATIONAL CIVIC FEDERATION 

'The results are highly satisfactory, especially as to co- 
operation and permanency of force. The average number of 
employees is 900, with practically 750 participating. The 
employees are very much pleased with the plan, and do not 
hesitate to express their appreciation of same. Inasmuch as 
they are virtually stockholders, they realize that labor trou- 
bles seriously affect profits, and the plan has therefore aided 
materially in adjusting all difficulties. 

"It may be interesting to point out that since the adoption 
of this plan the dividends to stockholders have been increased 
instead of diminished and the dividends received by the em- 
ployees on their yearly earnings ranged from 14% in 1915 
to 34% in 1918. 

"It is our opinion that under this plan the employees were 
placed in position to aid materially in the increase in the 
profits of the company. 

"In regard to the method of payment, while our plan so 
far has provided for cash payments only, we realize that 
sooner or later some provision should be made for allowing 
employees to invest some of these dividends in stock. 

"Our idea would be to issue preferred stock, for instance 
7% cumulative, and allow the employees to subscribe for 
same on easy payments, with a provision, however, that this 
should be voluntary so that certain classes of employees who 
do not realize the value of stock ownership will not be com- 
pelled to take stock in lieu of cash dividends. This plan 
would overcome difficulties that arise where stock is worth 
several times its par value and where it is not advisable or 
practicable to increase the amount of outstanding stock." 

Union Oil Company of California, 
los angeles, cal. 

(1919) The plan of this company includes all of the 
3,000 persons in its service except the chairman of the board 
of directors and the president. It was installed January 1, 
1916. The amount divided among the employees varies with 
the annual net profits of the company, there being a dividend 
of 2^/2% of salary or wages when the profits amount to 3% 
and less than 7%, the progressive advance reaching 15%. 
The employees receiving a salary or wages in excess of 



PROFIT SHARING REPORT 69 

$1,000 may, at the option of the company, be paid their 
share of profits in stock or cash. The profit sharing plan is 
voluntary on the part of the company, and may be cancelled 
by the board of directors. The company considers that the 
plan may be regarded as a success. (Printed circulars.) 

Union Savings Bank and Trust Company, 
cincinnati, ohio. 

(1916) A certain percentage of the company's profits 
above 6% on the capital stock is set aside for distribution 
among the employees who have been in the company's service 
three vears or more. 

The company retains charge of the accumulation of this 
fund, allowing a liberal rate of interest, and permits an em- 
ployee to withdraw his portion only when he desires to leave 
the company's service, or when the amount withdrawn is to 
be used for investment in a home or in some security ap- 
proved by the company. Such securities are kept in its 
custody. 

The company at first made this profit sharing distribution 
directly to its employees, but found this to be a failure and 
resorted to the plan now in use. It is the belief of the man- 
agement "that each of our employees receives fully the same 
regular salary that our competitors would give him" and that 
"he gives us better service than he would our competitor, as 
an automatic result of our profit sharing plan." The average 
distribution per year is estimated at between $300 and $400 
per employee. 

(1919) William L. Thede, secretary, September 5: 

"Our profit sharing plan is still in force." The company 
issues booklets describing its profit sharing, pension and an- 
nuity funds. 

The late J. G. Schmidlapp, chairman of the board of 
directors, referring to the plan in a booklet, wrote: 

"Critics often suggest that this plan is too paternal to 
satisfy the average employee, and that if the dividend really 
belongs to him, as I contend it does, it should be given to him 
outright. My idea is that the employee should be consulted 
as to the investments made of the fund, but that unless we can 
teach him to save it the distribution will do more harm than 
good." 



70 the national civic federation 

Warner Hardware Company, 
tools, builders' hardware, etc. minneapolis. 

(1919) Leon C. Warner, president, states that he has 
studied the problem for several years with a plan in view. In 
January, 1919, the company issued a bulletin announcing 
that after 8% on the capital invested in the business had been 
deducted from the profits, 50% of the remainder would be 
apportioned to the employees, all of whom were to partici- 
pate. Commissions on sales were discontinued. By the plan 
it was expected to avoid waste, bring expense to a minimum 
and promote efforts toward efficiency. The system was to be 
considered not as a deferred salary but as giving a profit for 
extra efforts in co-operation. The number of employees aver- 
ages about 1,000. 

Mr. Warner reports that the plan has not received from 
the employees the consideration he believes it deserves, al- 
though in the latter part of the year those who understood the 
plan showed an improved degree of steadiness and interest in 
their work. 

Wayne Knitting Mills, 
manufacturers of hosiery. fort wayne, ind. 1904. 

(1916) The company organized a "textile industrial 
club" composed of heads of departments and certain officials 
with a membership of about fifty. A fixed percentage of 
the company's profits over and above the regular dividends 
was set aside as a club fund and a portion of this was used 
to build a clubhouse. From this fund also, payments in the 
nature of profit sharing are made to the members on a per- 
centage basis, and small bonuses of from S5 to $50 are dis- 
tributed among several hundred other employees, not piece 
workers, at the end of the year, as a matter of good will. 

Social affairs of the textile club are managed by commit- 
tees chosen by the members, while matters of a business na- 
ture are handled by the company. A member who fails to 
attend three consecutive meetings of the club without excuse 
is expelled and ceases to share in the profits. 

(1919) The company, in a circular letter, thus de- 
scribes its profit sharing system: 



PROFIT SHARING REPORT 71 

Ours is not a new plan resulting from war conditions 
or labor's new demands, but rather it is a hold-over of 
the old system, and must be considered from that point 
of view. Of course, it has undergone constant enlargement 
and extension with the growth of the factory. Some new 
and special features of constructive welfare work have 
been added within the last two or three years, but it would 
not be correct to say that they have resulted in any direct 
way from the war. Our policy of "working as closely in 
a co-operative way with labor as present industrial and 
economic system will allow" was introduced about 17 
years ago, after a period of unrest followed by a two- 
months' lockout. Under this policy the management works 
with and through employees represented by a "union" 
committee, and also through the heads of departments and 
overseers represented by a textile industrial club. 

We recognize the union, and the union recognizes the 
management. Annually, with the election of new officers, 
the union appoints a factory committee of from 12 to 15 
men, who meet with the management upon a call from 
either side, when mutual plans, suggestions, grievances, 
recommendations, etc., are discussed and acted upon. 
These meetings are attended by the general manager, 
superintendent and other assistants, as well as such shop 
foremen as are interested in the subjects under considera- 
tion. Through this close contact of officials and working 
people, a better understanding of each other's wants and 
viewpoints is created. Naturally it took some years before 
sufficient confidence and mutual respect was inspired to get 
results and convince both sides of fairness. Neither is 
it entirely a one-sided proposition, for while labor presents 
its grievances and suggestions to the management, on the 
other hand the management brings its problems and griev- 
ances (affecting such questions as production, quality, 
labor supply, etc.) before the committee. In other words, 
the management uses the union quite as freely as the 
union uses the management. It goes without saying that 
while the management has obtained an ideal situation 
with regard to labor, quality of work, etc., the employees 
have also obtained a maximum of wages and bonuses, as 
well as a share in the profit. Yet we are not averse to 
saying that from the time that this arrangement became 
truly operative the stockholders' profits went up every 
year. In other words, it has proven up to this time a 
profitable investment for both capital and labor. 

While this policy has met conditions up to this time, 
we are conscious of the larger expectations and require- 
ments of both capital and labor, which may call for still 
more progressive measures. In this connection we may 
add that we have voluntarily reduced the hours of labor 



72 THE NATIONAL CIVIC FEDERATION 

to 49% hours per week, and are planning to go to 48 
hours. We have also extended the profit sharing system 
to all employees. This was formerly confined to heads 
of departments and officials. Last year this amounted to 
a total of 15% of the year's earnings. For our part we 
are expecting labor to do more intensive manufacturing by 
eliminating the slack in one way or another so as to give 
us practically the same production in 48 hours as was for- 
merly accomplished in 52% hours. We believe that this 
can be done in a majority of departments. So much 
for our co-operative plans with organized labor. Whether 
or not we will be able to continue hand in hand until we 
enter the "gates of Utopia" is more or less problematical. 
Department heads, overseers and minor officials: Be- 
fore the introduction of our co-operative and welfare sys- 
tem 17 years ago, our various department heads were al- 
most strangers to each other; there was more or less 
friction and no co-operation. In an effort to overcome this 
condition we organized the Textile Industrial Club, in- 
cluding in its membership heads of departments, over- 
seers, inspectors, minor officials, and certain special 
workers. At the same time a regular share of the general 
profit was set aside, the distribution of which was left with 
the manager, who uses his best judgment and experience 
in allotting the amount set aside for distribution among 
members at the end of the year. This profit sharing fea- 
ture is used as an incentive for producing general results. 
Regular attendance at the bi-weekly meetings, covering a 
full evening, is a requisite of the profit sharing privilege 
and membership in the club. The manager and other 
active officials attend these meetings quite frequently, in- 
troducing subjects for discussion and action by the club. 
Otherwise the organization is quite independent, electing 
its own officers and preparing its own program. Impor- 
tant items in our business are production and quality, 
and these matters are a part of the regular schedule 
for every meeting. Six standing committees are appointed 
each year, all of which report regularly on their re- 
spective subjects. The management gives the organization 
a free hand in many ways, and has gotten in the habit 
for a number of years of throwing the responsibility 
for much of the factory work upon the club and its com- 
mittees. Irregularities and disputes are ironed out, and 
much assistance is given the management through a proper 
and sympathetic interpretation of its policies and its needs. 
In addition, the members of this club have pretty generally 
taken advantage of our many educational features, some- 
thing quite important, when we consider that the average 
shop foreman or forelady is without anything more than 
a "grammar school" education. 



PROFIT SHARING REPORT 73 

A 50-50 division of profits between the stockholders 
on the one hand and the active officials and employees on 
the other was adopted. The stockholders' share was paid 
out partly in cash and partly devoted to surplus. The 
employees' share was divided into three parts: First, 
officials; second, Textile Industrial Club (heads of de- 
partments and minor officials) ; and third, employees gen- 
erally. The first two were paid m cash; the third, for 
employees generally, was paid partly in cash and partly 
devoted to special funds. One of these funds was used 
for the building and maintenance of a club house. Later 
all of these were merged into a general welfare fund, 
which was extended to include the following: Club house 
for the exclusive use of employees, old age pensions, 
group life insurance, accident insurance, sick benefits, 
poor and distress relief, free dispensary and medical at- 
tendance, educational classes, etc. . . . 

The profit sharing feature has unquestionably been 
a live factor in the development of the business. The stock- 
holders' earnings have steadily increased, and the earnings 
of the officials from the highest to the lowest, as well as 
those of department heads and employees generally, have 
been quite generous, meeting all demands and expecta- 
tions. We have no recollection of an official or experi- 
enced head of a department leaving our employ to engage 
in a competitive business or to join a competitor. We 
endeavor to offer opportunities to ambitious capable men 
equal to those found in private enterprises or offered 
by competitors. 

Wildman Magazine and News Service, 
new york city. 

(1919) The plan of this company for giving the em- 
ployees a percentage of profits, put into effect in 1908, is 
still in force and affects all the writers and artists. They 
regard it as a beneficial scheme, and it has been modifying 
the tendency toward labor troubles. Stenographers do not 
participate. 

The company states that the only hitch in the profit shar- 
ing is the fact that the employees do not understand the cost 
of securing and maintaining business (salesmanship and 
overhead). Constant explanation is required to keep them 
informed of the reasons of expenditure of the firm's funds. 



74 THE NATIONAL CIVIC FEDERATION 



SPECIAL DISTRIBUTIONS. 

Voluntary special distributions are in this country numer- 
ous. They are of interest mainly as reflecting the disposition 
of many employers to make awards to their employees with- 
out committing themselves fully to systematic annual profit 
sharing. In many cases the motives for giving the largess are 
obviously mixed. On this point the letters which follow af- 
ford a variety of testimony. The forms of giving cover a 
wide range, from the petty to the substantial. Among them 
are the following: 

Cash payments, determined arbitrarily by the em- 
ployer, at the end of a business period, usually the year. 

Relief funds — sickness, accident, death, pension — 
maintained wholly or in part by the employer. 

Liberal interest to employees on savings deposited with 
the employer. 

Rewards for prompt attendance or efficient work or for 
civic merits. 

Life insurance, paid by the employer, in cases based 
on efficiency or term of service. 

Loans to employees without interest or at nominal rate. 

Discounts on commodities sold to employees. 

Bonuses, especially at Christmas or Thanksgiving. 

Prizes for shop suggestions or home improvements 
such as gardens. 

Free transportation. 

Meals supplied to employees free or at nominal prices. 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. 
A date in a sub-heading indicates the year in which the 
experiment under notice began.] 

Advance Pump and Compressor Company, 
battle creek, mich. 

(1919) L. B. Anderson, treasurer, November 11: 
'This company has no particular type of profit sharing 
except that of giving our employees at the end of the year, 



PROFIT SHARING REPORT 75 

from the manager down to the lowest paid employee, a 5% 
bonus upon the amount of wages which he has drawn during 
the year. This is paid to him just before December 25. We 
have not investigated the matter to see if our people prefer 
any other method than that of bonus system, but we have 
heard of others who have given bonuses where employees 
prefer to have the amount weekly or monthly in their pay 
envelope." 

The Alexander Hamilton Institute. 
new york city. 

(1916) All employees who have been in the service of 
the Institute one year or more are given a bonus of 5% on 
their annual salaries. The distribution is made at the holiday 
season. 

(1919) Dwight E. Beebe, director of service, October 
18: I 

"We have no profit sharing plan at the present time. We 
do maintain, however, a bonus plan. We have under consid- 
eration a profit sharing plan which we hope to put into opera- 
tion in the early future. Just as soon as this plan has been 
decided upon, I shall take pleasure in giving you the details." 

The Institute issued in 1919, its "Modern Business Report 
No. 14," a pamphlet on "Profit Sharing," with descriptions 
of typical methods. A conclusion was: 

"While it is realized that no one method of reward 
will smooth away all difficulties arising between the em- 
ployer and the worker, it has been made evident that 
profit sharing wisely directed has proved itself as effective 
in so doing as any agency which has yet been tried." 

W. D. Allen Manufacturing Company. 

CHICAGO. 

(1919) W. D. Allen, November 11: 

'We have been a profit sharing concern to a modified 
extent for about twenty years. We have about 300 em- 
ployees, 150 in our office and 150 in our factory. They all 
participate even if to a very little extent. If we hire a scrub- 
woman the day before the distribution is given out, she gets 



76 THE NATIONAL CIVIC FEDERATION 

two dollars or something like that to send her home happy. 
We give it to everybody except the four members of the firm. 
As far as we know, our people like the scheme very much, 
whether it bears anything more than a sentimental feeling, 
we do not know. We are inclined to think that in our fac- 
tory it has rather modified the tendency toward strikes. Of 
course, in the office, we have a very different class of people 
and there never was any danger of strikes. As for its being 
an unqualified success, everything is that these days. 

"It may be a strange thing for us to say, but we keep up 
this profit sharing proposition as much for the pleasure of 
doing it as anything else. Our business year ends December 
1 and by the 20th of December we usually have the figures 
upon which to base the rate of Christmas dividend, as we call 
it, so that along about Christmas time we have a very happy 
family. Our figures are, of course, small. We divided last 
year with our people, about $12,000. 

"We have a card index system on which the record of 
each employee is put down, length of service, possibly some 
remarks by the head of the department as to the record, and 
on that we base the amount of dividend. Last year we gave 
out for instance to our stenographers $50 each, at least those 
who have been with us any length of time. The brass molders 
in the shop who have been with us a number of years and 
whose records were good got the same amount, and if our 
employees get half as much fun out of it as the members of 
the firm do then it is a success. We have this feeling too, that 
you have got to go into all these schemes in the right spirit. 
If the employees thought for a minute that we were giving 
lower wages because we gave this Christmas dividend, they 
would probably spoil the whole thing. Our experience in 
things like this and welfare work, is unless you do it in the 
right spirit, your people feel the insincerity of it." 

Aluminum Goods Manufacturing Company. 

manitowoc, wis. 

(1919) George Vits, president, November 13: 

'The average number of employees we have is 2,800. 

Our bonus plan is satisfactory and is accepted by all except 

a few who are strong labor union men. It has been the means 

of modifying labor troubles and has helped us in our labor 



PROFIT SHARING REPORT 77 

turnover. It includes all of our employees except the di- 
rectors. We claim our bonus plan is a success but we do not 
know of any plan that under the present conditions can be 
called a 100% success. We also carry for our employees an 
employee's insurance the expense of which is borne by our 
company. We have no profit sharing nor any percentage of 
our profits. We are giving this bonus mainly to keep down 
our labor turnover. 

"Our plan is this: We set aside 10% of our labor cost 
including our office or non-productive labor. This is payable 
the following year. For instance, on January, 1919, we paid 
our employees 5% bonus on their wages for the first half of 
1918. We paid another 5% bonus on July 5, 1919, for the 
last half of 1918. When the last payment was made we 
found that there was a surplus owing to the fact that some 
of our employees who were entitled to the bonus were no 
longer in our employ at the time the second bonus was paid, 
so we gave those who were at work an additional 21/2%. 

"Our bonus did not prevent us from having labor troubles 
at one of our plants but the trouble was not confined to our 
plant alone. The agitators came to a small city where we 
have our plant and called out all the labor in all of the manu- 
facturing institutions in the city to the number of six." 

The American Appraisal Company. 

milwaukee, wis. 

(1919) From the librarian, November 14: 
"Our present bonus plan was inaugurated March 1, 1917, 
and is based upon the computation of one point for each year 
of continuous service, one point for each $100 of annual sal- 
ary of each employee. The value per point is determined 
according to the earnings for the respective periods. The 
first bonus was paid on a yearly basis, but after the first year 
the bonuses have been paid quarterly. In addition to the 
regular bonus, special bonuses are paid at the same time, be- 
ing arbitrary amounts determined by the management as a 
special reward for meritorious services of department heads 
and the more aggressive employees in the rank and file. The 
company carries a group insurance policy, insuring the lives 
of every employee of six months' standing; the policies rang- 
ing from $500 to $1,500. The company compensates em- 



78 THE NATIONAL CIVIC FEDERATION 

ployees when incapacitated on account of accident or sickness 
for amounts and for a period of time depending upon their 
years of service with the company. Employees who have 
been with the company over six months and not over one year 
receive full salary for the first week's disability, and one- 
half salary for the remaining weeks for one month; and addi- 
tional two weeks of one-half salary for each additional year 
of continuous service with the company, but not duplicating 
any other industrial compensation paid for by the company. 

'The average number of our employees is 650 at this 
time, and of these about 400 participate in the plan. The 
feeling toward the plan, by those for whose benefit it was 
intended, is appreciative and enthusiastic. We employ no 
labor; our personnel being made up of professional appraisal 
talent and office clerical employees. Our bonus plan is not 
limited to heads of departments but includes the rank and 
file with every employee eligible to participate after being 
in the employ of the company for one year. While there have 
been a few individual scoffers who have advanced the old 
plaint that they would prefer a wage increase instead cf a 
bonus, we do regard our plan as an unqualified success/' 

American Blower Company. 
fans, engines, heaters, etc. detroit, mich. 

(1919) J. F. G. Miller, vice-president and treasurer, 
November 12: 

c We have a shop profit sharing plan in operation in this 
company, which was started August 1, 1917. We set aside a 
certain percentage of the profits each month for distribution 
monthly to all employees who are eligible under our rules. 
All employees are eligible except executive officers, sales or 
other employees operating under a bonus system of profit 
sharing, shop employees who have been on our payroll less 
than three months, office employees who have been on our 
payroll less than six months. 

The normal number of employees of this company is 
about 1,000; about half participate in the profit sharing plan. 
Employees, who are eligible on account of length of service 
and position must also have attendance and performance rec- 
ords up to a satisfactory mark. It is our opinion that em- 



PROFIT SHARING REPORT 79 

ployees look upon profit sharing principally as additional 
wages and retain their connection with the company, if they 
do, not because they participate in the profits, but because 
their wages plus profit sharing are equal to or better than 
they can obtain in other plants, other conditions also being 
equal. We think this attitude on the part of employees is 
not altogether their fault. The character of the work which 
we do is such that it is extremely difficult to measure the per- 
formance of each individual employee so that he can know 
from his own eyes when his work is above the average enti- 
tling him to profits and when it is not. As we go along, we 
develop the system which we installed so that as far as pos- 
sible an employee can measure the results of his own efforts. 
"We do not regard our system as an unqualified success 
for the reason stated above. We have a system of profit shar- 
ing on a bonus plan, which is applied to our sales force, which 
we think is an almost unqualified success, the reasons being 
diat salesmen can measure the results of their own w T ork al- 
most exactly and as a class they have a higher economic edu- 
cation than shop men. One good effect of our shop profit 
sharing plan is that since the distribution of profits depends 
somewhat upon attendance, the average record of attendance 
i9 better than it was prior to its installation," 

American Smelting and Refining Company. 

NEW YORK. 

(1919) Roger W. Straus, assistant to the president, No- 
vember 11: 

''This company has at present no profit sharing plan in 
effect, although it has been the custom for many years that 
when our profits are above a certain amount we give bonuses 
to all salaried employees of the company based upon a per- 
centage of their yearly salary. This percentage varies with 
the profits made during the previous year, and is voted by the 
board of directors. So far as the wage-earners are concerned, 
the board has in the past at the same time as voting the bonus 
laid aside certain funds of money to enlarge our work among 
employees along the lines of pensions and life insurance. 
This company is, however, interested in profit sharing plans, 
and is trying to make a study of them." 



80 the national civic federation 

Anchor Post Iron Works. 
GARWOOD, n. j. 1911. 

(1916) H. G. Thomson, president, February 29: 
'We are a manufacturing corporation, our factory being 
at Garwood, New Jersey, and in addition to our shop men we 
employ an equal or larger force of workmen outside the fac- 
tory for the setting up of our fences, railings and gates, 150 
in all. 

"The company has had for a number of years a profit 
sharing arrangement, only including, however, about a half 
dozen of the chief executives or department heads, and three 
of our branch managers in Boston, Hartford and Philadel- 
phia. 

"Our profit sharing plan is for cash distribution at the 
end of each year, based on salary and the net profits of the 
preceding year. 

'We regard it as successful as far as it goes. We are in- 
clined to think, however, that it is too narrow in its scope and 
should be modified so as to include more individuals than 
now participate. 

"I have always been of the opinion that profit sharing 
which included workmen and mechanics, either inside the 
factory or outside, was not a very satisfactory arrangement 
from the employer's point of view; that the real way of pay- 
ing extra wages, if that is desirable, should be in the shape 
of a bonus on work actually performed over and above the 
average daily output, provided that can be easily and quickly 
computed; that the deferred profit sharing, as far as workmen 
are concerned, is very likely to create a feeling of discontent 
whenever the profits, as they sometimes do, fall below those 
of previous years. 

4 We do feel, however, that something of advantage could 
be worked out to include practically all of our office force 
and factory heads, who are, of course, in very much closer 
touch with the trend of the business from month to month, 
and are, we think, of unusually high order and intelligence, 
loyalty and faithfulness to the interests of the firm. 

'We have a committee of our board of directors investi- 
gating this whole question. The question is so complicated 
and has so many pros and cons that I am very much in doubt 



PROFIT SHARING REPORT 81 

at the present time as to what method, if any, would be de- 
sirable. 

"As I look at the matter, if profit sharing is desirable at 
all, it should not be on a fixed percentage for all based on the 
amount of salary each is receiving, but that rather there 
should be two, three or four classes of employees each receiv- 
ing a different rate of bonus. In other words the executive 
or department heads, who are in a large measure responsible 
for the success of the business, should be in a group by them- 
selves as we now have it, and should receive a larger degree 
of bonus than the others. If this group of employees is the 
right one, an office boy, for example, would be in the lowest 
class. If by energy and intelligence he were promoted to 
be a salesman, he would then step up into a higher class, 
where the year's division of profits would be more attractive. 
If from that he became a sales manager or head of a branch 
office, he would be promoted in a still higher class, and finally 
if he became a director of the company he would be in the 
highest class of all. 

"The stock of our company is only held in the hands of a 
few individuals, and we have never had any general distri- 
bution of it, although we might do that at some later day. I 
do not believe in a concern selling its stock to its employees, 
unless possibly it be a company like the United States Steel, 
where the stock is largely in the hands of the public, is traded 
in from day to day and has a definite value from day to day." 
(1919) President Thomson writes, September 5: 

'The plan of 1916 has been continued and we have since 
added group insurance for the benefit of all of our workers. 

'The profit sharing plan, we believe, has worked bene- 
ficially in all of the higher classes, that is, executives, branch 
managers, salesmen, stenographers, draughtsmen and clerical 
force in general. With the workmen at the factory and out- 
side erectors, such as we employ, it is very doubtful whether 
profit sharing accomplishes its true purpose. At any rate we 
feel that ours does not and that some better plan of immediate 
reward for good service, such as a bonus on production, 
would be better than a deferred profit sharing. The commit- 
tee having this matter in charge may therefore modify our 
plans to this extent, and other than that we intend to carry 
it on as we have done in the past until something better is 
demonstrated." 



82 the national civic federation 

Art in Buttons, 
rochester, n. y. 

(1916) In the sharing of profits among the heads of 
departments and the rank and file, both in cash and stock dis- 
tributions, there are taken into consideration all possible 
factors such as length and quality of service, individual 
achievements and faithful attendance. In some departments, 
half the operators have been recipients but the general aver- 
age is less than one-quarter of the employees. 

(1919) The company reports: "Our profit sharing plan 
stands practically as it was in 1916." 

Atherton Furniture Company. 
brockton, mass. 1914. 

(1916) Beginning with the year 1914, the company gave 
each employee who had been in its employ for one year or 
more a cash bonus of 2% of his yearly salary. 

The company continued the plan for the year 1915. 

(1919) L. B. Atherton, October 8: 

"Our profit sharing plan is still in force, and there has 
not been any change except to increase the percentage of the 
annual salaries. Since adopting this plan we have given all 
of our regular employees a percentage of their annual sala- 
ries at the end of each year, as follows: 1915, 2%; 1916, 
4%; 1917,4%; 1918,6%. 

"We believe this plan has helped to retain our employees, 
has made them better satisfied; they have taken more interest 
in their work and have been more loyal to the company. We 
employ an average of about fifty in our Brockton store." 

Atlas Underwear Company, 
richmond, ind. 1916. 

(1916) The company announced in January that bon- 
uses amounting to nearly $10,000 would be paid to the em- 
ployees who remained with the company until December 15, 
1916. The distribution per employee will be between $12 
and $13. Persons entering the employ of the company after 
February 1 will receive, on December 15, $1 for each month 



PROFIT SHARING REPORT 83 

they have been in service. In addition, special cash prizes 
will be given as rewards for faithful attendance, punctuality 
and service. 

(1919) A. L. Flesh, vice-president, October 10: 
"Our profit sharing plan has been changed from the plan 
as originally adopted. It is too early to make any intelligent 
report upon the success of our present system, except that 
since its adoption there has been an improvement in regular 
attendance. The old system was discarded in order primarily 
to make a larger distribution, and secondarily to make these 
distributions at shorter intervals." 

An illustration of the new system is as follows: 

Week's earnings on piece or day work basis $15.00 

7% premium for regular attendance 1.05 

3% premium for maintenance of production 45 

To'a] week's earnings $16.50 

Average earnings are computed anew every four weeks. 
Any weeks of missed time are eliminated from the four 
weeks' period in figuring the average. This premium system 
is open to every employee of the Atlas, both piece-workers 
and day-workers, with the exception of foremen and second- 
hands who are employed on a straight time basis. These 
foremen and second-hands are rewarded at the end of the 
year with special premiums. 

Walter Baker & Co., Ltd. 

MANUFACTURERS CHOCOLATE AND COCOA PREPARATIONS. 

BOSTON, MASS. 1904. 

(1916) Employees having served one full year, are 
given a bonus of 5% of their earnings; those who have served 
over that time receive 10%. This distribution is made upon 
the vote of the directors at the end of each year and depends 
upDn the profitable outcome of the year's business. 

In 1914 the company had 650 employees. 

(1919) H. C. Gallagher, president, September 8: 

'We have made no change whatever since our last report 
relative to our special distribution plan to the employees, 
which has been in operation now a number of years and is 
still in force. All of our factory employees participate. We 



84 THE NATIONAL CIVIC FEDERATION 

can only say that we would not continue this plan unless we 
felt that it was of mutual benefit. Salaried employees or of- 
ficers are not included in this special distribution." 

Bay State Milling Company, 
millers of hard spring wheat and rye. winona, minn. 

(1919) B. J. Rothwell, president, November 10: 

"The companies with which the writer is connected as 
president, viz., Bay State Milling Company, Winona, Minn., 
and the Lawrenceburg Roller Mills Company, Lawrenceburg, 
Ind., put into effect some four years ago a bonus system by 
the operation of which all the employees in the mills and of- 
fices with the exception of the executive officers who are on 
the payrolls of the companies December 31 each year, receive 
10% of the wage or salary paid them during the preceding 
year. No distinction is made as to whether the individual 
has been in the employ of the company the entire year or for 
a longer period, or whether a relatively newcomer. In addi- 
tion, the companies provide, at their expense, life and dis- 
ability insurance policies for $1,000 on each employee in the 
mills and offices. These policies can be continued by the 
employees should they leave our employ by simply continu- 
ing to pay the premiums, so that we do not undertake to re- 
strict the freedom of change. 

"The theory adopted was that the earnings of the indi- 
vidual represented an equivalent investment in a 10% stock 
of the company. In fixing base wages and salary we have 
disregarded this bonus. Payment of it is contingent upon 6% 
having first been set aside on the book value of the capital 
stock. 

'The average number of employees is, approximately, 
450. We are not convinced as to its being of any particular 
advantage. It is probably appreciated by most of the office 
force and heads of departments. It is a question whether it 
has any special appreciation with the rank and file. We are 
inclined to believe that it has grown somewhat in this respect, 
having first been viewed with suspicion. We are also inclined 
to believe that the insurance feature has to a certain extent 
stabilized our labor, although our labor turnover has never 



PROFIT SHARING REPORT 85 

been high, our mills being located in the country, and the pop- 
ulation not being as migratory as in larger places." 

Beech-Nut Packing Company, 
pure food products. canajoharie, n. y. 1912. 

(1916) The company pays to each employee who ha9 
been in its employ for at least one year $3 for every year of 
service. The bonus is paid in cash about the holiday period. 
Of the total force of 776, in 1914, 422 shared in the distri- 
bution. 

(1919) The company reports, September 10, that, in 
addition, "for several years around New Year we have made 
a cash distribution in which managers, superintendents, fore- 
men and others holding positions of responsibility have par- 
ticipated." 

Bemis Bro. Bag Company. 

ST. LOUIS, mo. 1912. 

(1916) All officials getting a salary above the average 
are given a bonus depending directly upon the amount of the 
annual salary paid and amount of common dividend declared 
by the company. 

The second plan applies to all other employees of the 
company, and ranges from 2% for one to two years' service 
to 20% for over ten years' service. 

It was inaugurated to encourage faithful, efficient work, 
and under it each year a premium is paid based upon the 
amount of wages and dependent upon the length of faithful, 
efficient, continuous service. 

The company reports that the plan has not been an un- 
qualified success for the following reasons: 

1. From an economic point of view, it has given too great 
a premium to the older employees after passing the time when 
their efficiency can be increased or maintained. 

2. On account of the very short length of time during 
which in these days most of the younger women work, it does 
not seem to provide the incentive to the less experienced hands 
which had been expected. 

A modification of the plan to meet these deficiencies is 
under consideration. 



86 THE NATIONAL CIVIC FEDERATION 

(1919) The Bemis Bro. Bag Co. has branches at the 
following points, at all of which the same plan is in effect: 

Bemis Bro. Bag Co., St. Louis, Mo.; Minneapolis, 
Minn.; Indianapolis, Ind.; Kansas City, Mo.; Omaha, Neb. 
New Orleans, La.; Memphis, Tenn.; San Francisco, Calif. 
Seattle, Wash.; Houston, Texas.; Winnipeg, Manitoba 
Peoria, 111.; the Home Cotton Mills, St. Louis, Mo., and 
the Indianapolis Bleaching Co., Indianapolis, Ind. 

A. F. Bemis, president, writes, September 26, describing 
the company's methods: 

"Since the special distribution plan affects two distinct 
groups of people differently, I have listed my answers under 
two headings as follows: 

"Plan A refers to the bonus class. 

"Plan B refers to the wage premium class. 

A SALARY BONUS PLAN. 

Each employee of the Bemis Bro. Bag Co. who receives 
during the calendar year a fixed salary at the rate of 
SI, 800 or more per annum will receive additional com- 
pensation contingent upon any declaration of a cash divi- 
dend on the common stock of the company between Feb- 
ruary 2 of that year and February 1 of the year following, 
the amount of such additional compensation being deter- 
mined by multiplying said fixed annual salary by twice 
the percentum rate of the dividend declared, the additional 
compensation being payable upon the same date as the 
dividend is payable to the stockholders; provided that no 
employee to whom additional compensation has been of- 
fered based on length of service and wages earned, under 
the wage premium plan applying to employees receiving 
less than $1,800 per year, will be offered additional com- 
pensation under this resolution unless he first waives all 
claim to compensation under the other offer. This bonus 
does not apply, nor is the company in any way obligated 
to pay the bonus, upon stock dividends or other similar 
distribution of profits or capital nor in any distribution 
clue purely .to a reorganization of the company. 

B WAGE PREMIUM PLAN. 

This plan applies to all employees of the company who 
receive salaries or wages at the rate of less than $1,800 
per year. The amount of the premium depends upon the 
length of efficient, faithful, and continuous service and is 



PROFIT SHARING REPORT 



87 



based on the actual amount of wages received during the 
six months ending May 31 and November 30, respectively, 
and according to the following schedule of service and 
percentages of wages : 

If still in the active serv- 
ice of the company will re- 
ceive on or about July 10 
and January 10 a premium 
based upon the following 
percentages of wages re- 



Employees whose length 
of efficient, faithful, and 
continuous service on May 
31 and November 30, has 
been 








1 


year 


2 


years 


3 


a 


4 


44 


5 


a 


6 


a 


7 


a 


8 


a 


9 


a 



ceived during the six months 



More than 10 vears 





ending 


May 31 and Novem 




ber 30, 


respectively 


1 year 




10%' 


2 years 




11% 


6 




12% 


4 « 




13% 


r a 
D 




14% 


6 " 




15% 


7 " 




16% 


8 " 




17% 


9 " 




18% 


10 " 
/ears 




19% 

20% 



"Plan A is still in force. 

"Plan B is still in force with modifications. 

"Plan A has probably materially interested those subject 
to its provision in the company's profits and stimulated their 
endeavor. 

"Plan B has probably tended directly to stabilize and 
stimulate loyalty among our older factory workers and office 
employees. The younger employees apparently disregard it. 

"Plan A affects an average number of 125 employees. 
The number participating is 125. 

"Plan B affects an average number of 5,000 employees. 
The number participating is 5,000. 

'Plan A remains unchanged since 1916. 
'Plan B was modified once at the end of 1917 when we 
increased the percentages owing to war conditions and cut 
down the initial length of service required to become eligible 
to this premium from one year to six months, the percentages 
ranging from 10% for this initial length of service to 20% 
for more than 10 years' service, the premium being distrib- 
uted twice yearly instead of only once as heretofore. It was 



1.41 



44" 



88 THE NATIONAL CIVIC FEDERATION 

again changed in June, 1918, the percentages remaining the 
same but the initial length of service being reduced from six 
months to nothing. 

"Plan A has produced a kindly feeling, contingent to a 
large extent upon the prosperity of the company and the reg- 
ularity of payments. On the one occasion, when we passed a 
dividend and consequently made no bonus payments, we 
found that quite a few employees had made up their own 
personal budgets including these expected payments as part 
of their fixed incomes and in some cases had spent the ex- 
pected bonus in advance, which produced some dissatisfac- 
tion, although this was simply a personal issue and not the 
fault of the plan. 

"Plan B. — The factory workers look upon this as part 
of their pay anyway and they would prefer to have it in their 
weekly pay envelope. In some cases the fact that the pay- 
ment is deferred leads to dissatisfaction. The feeling toward 
the plan by office employees is probably kindly. 

"Plan A. — These employees are outside of the class from 
which we would expect concerted labor trouble. 

"Plan B has modified but not eliminated labor trouble 
since it dampens the effect which any outside agitator might 
have upon our employees during the period just previous to 
payment. Notwithstanding this we have seen evidence of 
factory employees quitting work immediately after payment, 
either temporarily or permanently. 

''Whereas neither plan can be called unqualifiedly a suc- 
cess, Plan A has worked very satisfactorily, and we have 
every present intention of continuing it and have no concrete 
views as to how we might improve it. 

"Plan B, however, has worked with only average success 
toward accomplishing our aims. In this class our aim has 
been to increase and maintain the interest of the employee 
in his work and his loyalty to the company. The plan is not 
really profit sharing as ordinarily known. It is rather a wage 
plan, simply to recognize in a specific way the productive 
value of faithful, efficient work as a stimulant to faithfulness 
and efficiency, and as indicated above, has had some measure 
of success — much more with the older employees than with 
the new hands. 

"However, our experience with Plan B throws an im- 
portant light on the problem of actual sharing of profits with 



PROFIT SHARING REPORT 89 

the main body of employees coming under this class. Our 
experience with Plan B, as described above, quite clearly in- 
dicates to us that were we to modify this plan it would be in 
in the direction of premiums or bonuses to be added to the 
weekly wage for quality and quantity of work done, rather 
than in the direction of the distribution of an annual or even 
quarterly money payment based upon the profits of the com- 
pany." 

Best & Go. 

DEPARTMENT STORE. NEW YORK CITY. 

The bonus distribution for 1919 exceeded the sum of 
$150,000. Checks went to more than 800 of the "non-sell- 
ing" employees, reaching practically every member of the 
organization employed previous to October 1. This distribu- 
tion does not include the commissions distributed monthly to 
the entire sales force. 

The Boardwalk National Bank, 
atlantic city, n. j. 1914. 

(1916) A cash distribution is made to employees, vary- 
ing according to their salaries, of 10% of the increase in the 
yearly profits of the firm. 

(1919) William C. Boyer, assistant cashier, Decem- 
ber 24: 

'We have no really established plan of distribution of 
profits among employees. Our rule is, generally, to take 
10% of increased profits over preceding year and divide pro 
rata. This year we divided $1,500." 

BOSSEMEYER BROTHERS. 
GRAIN MERCHANTS. SUPERIOR, NEB. 

(1919) E. Bossemeyer, Jr., November 26: 
'We have never been able to establish profit sharing in 
our business. For several years past we have paid each em- 
ployee who has been with us a full year a dividend based on 
the salary he has drawn during the year. Our employees 
understand that this depends on the business making a profit 



90 THE NATIONAL CIVIC FEDERATION 

for the year. We believe that it stimulates loyalty and makes 
a slower labor turnover, which is desirable." 

Botany Worsted Mills. 
PASSAIC, n. j. 1915. 

(1916) In December, 1915, a distribution of about 
$31,000 among the employees was reported, those in the serv- 
ice five years receiving $10; 10 years, $25; 15 years, $50; 
and 20 years or more, $100. It is understood that about 100 
men received the maximum of $100 each. It is not stated 
whether a similar distribution is to be made each year. 

(1919) C. Schlachter, superintendent, October 17: 

"The Christmas gratuities distributed among our em- 
ployees in December, 1918, amounted to approximately 
$52,000; those in service two years receiving $10; four years, 
$15; six years, $20; eight years, $25; 10 years, $30; and 
20 years or more, $50." 

The company introduced in June, 1919, a "bounty plan," 
by which in case of death the beneficiary of a wage-earner 
whose pay had been less than $50 a week is given the equiva- 
lent of a year's wages of the deceased, not exceeding $1,000. 
The announcement of the bounty plan concludes with this 
statement: "'The present employees of this company shall be 
entitled to participate in the foregoing plan notwithstanding 
their participation in the recent strike at the mill of the com- 
pany, which shall be deemed not to have interrupted an em- 
ployment which otherwise would have been a continuous em- 
ployment during the past year." 

Bowser Tank and Pump Works, 
fort wayne, ind. 1915. 

(1916) The company had used a premium system, based 
on individual time saving, but found it not an unqualified 
success, and in November, 1915, replaced it with a dividend 
plan based on the collective efficiency of the entire manufac- 
turing department. The factory employees, consisting of 
about 550 men, will be paid monthly a bonus in proportion 
to their wages. The plan also includes a reduction in the 



PROFIT SHARING REPORT 91 

working day from 9 to 8^ hours with no reduction in the 
day's pay. 

(1919) S. B. Bechtel, general manager, states that the 
plan is no longer in operation, having failed, principally due 
to the fact of the enormous difficulty, if not impossibility, of 
arriving at a figure which could be said to represent, even 
approximately, the savings which were supposed to form the 
basis for the plan. This plan accordingly evolved into nothing 
more nor less than a high-cost-of -living bonus, which in turn 
was discontinued, the various percentages, for the most part, 
being incorporated directly into wages. 

Since June 1, 1917, there has been in effect a plan, not 
of profit sharing, but of awarding employees, both factory 
and office, according to the length of continuous service a 
bonus consisting of cash and vacation. The cash award fund 
is determined each year by the gross shipments, and the in- 
dividual's award is then determined by a schedule. (De- 
scribed in a booklet.) The value of each share for the award 
year 1917-1918 was $12,245, so that an employee who had 
to his credit 10 years of service received not less than 
$122.45. On account of some unusual conditions, the value 
of each share for the award year 1918-1919 was $14.60, so 
that the 10-year man received this year not less than $146. 
In addition, vacations were granted in accordance with a 
printed schedule. 

Bradley Knitting Company, 
delavan, wis. 

(1919) J. J. Phoenix, president, November 14: 
'This company has usually established a base rate of pay 
during the year as conditions required, and given bonuses of 
10% cumulative covering increased living costs. The past 
year we have given three of these 10% bonuses, which are 
now included in our base rate. In addition to this, we have 
a 7% "attendance bonus" which is paid in December, and in 
a way is equivalent to the 7% paid on our preferred stock. 
The payment of the executives and department heads is based 
on a drawing account plus a share of the net profits during 
the year. Both of these plans have contributed to the efficiency 
and loyalty of the employees and department heads." 



92 the national civic federation 

Bridgeport Brass Company, 
bridgeport, conn. 

(1919) Robert H. Booth, superintendent of rates and 
labor, November 17: 

"We do not have in operation in any of our plants any 
plan whereby the workers participate in the profits of the 
corporation, unless they happen to be stockholders, as a few 
of them are. We do, however, have a plan whereby we dis- 
tribute at regular intervals among the workers of any depart- 
ment a share of the benefits of the profitable operation of 
their own particular department. 

"It happens that we call this plan of profit sharing a profit 
sharing bonus plan, to distinguish it from the ordinary profit 
sharing plan in which profits of a corporation are divided 
among the workers. We believe that our plan is better than 
the latter, because workers of any department have a very 
small influence on the profitable operation of a corporation 
of any considerable size, but the' influence of the workers on 
the profitable operation of their own department is powerful, 
and we believe that the members of the organization of any 
department that operates on a profitable basis should have 
adequate recognition, regardless of whether the entire busi- 
ness operates at a profit or not. 

"Our plan was inaugurated on March 1, 1919. It is still 
operating and being developed and amplified as rapidly as 
possible. The average number of employees in the depart- 
ments now operating under our profit sharing bonus plan is 
approximately 700. Clerks, foremen, messenger boys, in 
short all of the employees in the department concerned, are 
participants. Both foremen who are on a salary and workers 
who are on hourly wage rates join in the statement that it is 
the fairest proposition that they have ever heard of. We 
believe that this has been one of the beneficial factors con- 
tributing toward our freedom from labor troubles during the 
past year when they have been prevalent in other concerns 
in this industry and in this city. Our freedom from labor 
troubles has, however, resulted entirely from the square deal 
industrial policy of this company, of which our profit sharing 
bonus plan is only a part, although we believe a very im- 
portant part. Our plan affects every member of the depart- 



PROFIT SHARING REPORT 93 

mental organization from top to bottom in proportion to the 
value of his work to the departmental organization. Every 
day's operation of the plan and every additional step in its 
development adds to the very gratifying success which has 
attended its operation to date." 

Broadalbin Knitting Company, 
broadalbin, n. y. 1916. 

(1916) On January 6, 1916, the employees received a 
dividend of 5% on wages earned during the month of Decem- 
ber. The company announced that similar dividends will be 
paid for the first six months and the last six months of 1916, 
respectively, to all employees who shall have been in the 
service continuously during the periods named, unless laid 
off for lack of work or prevented by illness or -other good 
reason. 

In order to share in this distribution employees must be 
"diligent in their work and show by their energy and conduct 
that they are doing their part to make the business a success." 
The company states that if this scheme results in an increased 
production of well-made goods it will be continued, dependent 
upon the earnings of the business. It is understood that an 
expenditure of about $5,000 for 1916 is involved. 

(1919) A representative of the company writes, Octo- 
ber 8: 'We are not using any profit sharing plan at this 
time, nor are we paying any bonuses to our employees. We 
found they were better satisfied to get their money at the 
regular pay day than to hand it out to them through any other 
methods." 

By-Products Coke Corporation, 
syracuse, n. y. 

(1916) The plan of this company is similar to that of 
the Solvay Process Company, the two corporations being very 
closely allied. 



94 the national civic federation 

Samuel Cabot, Inc. 
manufacturing chemists. boston, mass. 1886. 

(1916) A certain share of the profits, not stated in 
advance, is set aside every six months for division among 
employees in proportion to their earnings. All employees 
who have been with the company six months, and who sign 
the profit sharing agreement, are eligible. This agreement 
defines the conditions of the distribution, and specifies that 
any employee who is discharged or leaves the service in bad 
standing forfeits his share, which is divided among the other 
shareholders. An employee who gives 60 days' notice of 
intention to leave retains his interest in the fund, which is 
paid to him in three annual instalments, provided he does 
nothing to injure the company in the meantime. One-half 
of each man's share is paid to him in cash and the other half 
is invested by the company for his benefit. From this latter 
credit the company may at its discretion make payments to 
the employee in case of sickness, and the fund may be mort- 
gaged to help a man build a house. 

The average number of employees is 100, of whom about 
80 participate. The plan was adopted because of the belief 
of Samuel Cabot, Sr., as expressed in an article in the "Review 
of Reviews" some years ago, that: "At a very early period 
in my business experience it appeared to me that the rewards 
ordinarily offered to the wage-earner were not such as to 
stimulate him to the best exertion nor foster in him the best 
and kindest feelings toward his employer." 

The present president of the company states his belief 
that the system is a success, but doubts whether it would be 
successful in any much larger plant. 

(1919) M. G. Bennett, general manager, October 8: 

"The profit sharing plan is still in force. The results are 
satisfactory. About 100 people participate. No change has 
been made since 1916." 

Cadillac Handle Company, 
lumber and broomhandles. cadillac, mich. 1914. 

(1916) Those employees who have been in the service 
of the company for at least one year are paid 3% of their 



PROFIT SHARING REPORT 95 

total earnings. Those who have been in the service two years 
obtain 5%; those in the service for three years, 6%. 

These payments are dependent, however, on the ability 
of the company to make these distributions. The plan only 
applies to the rank and file and does not include heads of 
departments or members of the office force. 

The company is "not prepared to say that it is or is not 
an unqualified success." The principal object was to promote 
more continuous service on the part of employees. 

(1919) This company has had in operation since 1913 
a bonus system of 3% on earnings for first year of service, 
with a progressive increase for the second and third year, 
when the maximum is reached. The participants range from 
35 to 40. A. W. Newark, secretary, states that the company 
has concluded that the larger number of employees feel that 
they want done to-day, right off, what is intended to be done 
by the employers some other day. As high a wage as can 
be obtained is wanted without waiting. 

The Caswell-Runyan Company, 
manufacturers of cedar chests. huntington, ind. 1915. 

(1916) In December, 1915, the company announced the 
adoption of a profit sharing plan for the benefit of its 400 
employees. The distribution ranges from 1% on yearly 
wages for those who have been in the service one year to 5% 
for those who have remained with the company five years or 
longer. The total of these payments is about $10,000. 

(1919) The company gives the information that it con- 
ducts its bonus plan as in 1916, with an average of 100 em- 
ployees, and has no labor troubles. 

In addition to this bonus plan it credits each employee 
with $1 for a full week's time, payment being made the pay- 
day before Christmas. This has been found advantageous in 
reducing turnover. Besides, to the shop foremen and office 
employees there is distributed each month one-half of 1% of 
the net shipments. To the foremen are given equal amounts, 
and to the office employees according to salaries. It has been 
the company's experience that with the three plans its product 
is up to the normal. Figures recently compiled indicate that 
the product per man is but 1^2% ^ ess tnan m 1-915. Its re- 
port concludes: 



96 THE NATIONAL CIVIC FEDERATION 

"It has been our observation that any profit sharing 
scheme dealing with the net profits of the corporation or 
stock holding interests has not proved satisfactory either to 
the employer or employee." 

Childs. 

restaurants. new york. 

(1919) F. C. Lane, for the company, November 12: 
"We have not yet introduced any definite plan, although 
we have been and are now considering several and will prob- 
ably inaugurate one when it has been decided which will be 
the most beneficial. However, we do pay a monthly bonus 
of 10% of the wages of employees who give continuous serv- 
ice during the month. This probably affects 4,500 or more 
of our 5,000 employees and is very popular with the em- 
ployees as well as beneficial to the company. We also finance 
the purchase of the company's common stock for such em- 
ployees as wish to take advantage of our plan, which is, 
briefly, to purchase the stock at the prevailing market price 
and accept monthly payments on it until paid for." 

The Cleveland Twist Drill Company, 
cleveland, ohio. 1915. 

(1916) After 8% is paid on the company's stock all 
additional dividends declared will be divided between the 
stockholders, in proportion to the amount of stock held, and 
the employees in proportion to the wages earned during the 
preceding year. The share of employees who have been con- 
tinuously in the service for at least two years will be at the 
same rate as that of the stockholders. Those in the company's 
employ one year but less than two will receive three-fourths 
of this rate and those in the service less than one year will 
receive one-half the rate. Only bona-fide employees in good 
standing will participate, but those laid off for lack of work 
or for sickness will share to the extent of the wages actually 
earned during the dividend period. 

The company emphasizes the fact that the plan is purely 
voluntary and that the right is reserved to discharge an em- 
ployee and thereby terminate his participation in the profit 
division at any time. 



PROFIT SHARING REPORT 97 

(1919) Jacob D. Cox, Jr., president, October 20: 

"Our special dividend sharing plan adopted in the fall 
of 1915 is still in force. During the first two or three years 
it was greatly liked by the employees and seemed to have an 
excellent effect. It certainly tended to reduce labor turnover 
during the war, particularly among our older employees, who 
were the backbone of our organization, and without whom we 
should have been in a very bad way. 

"During the last two years, on account of the heavy war 
taxes, the distributions have been declining and seem to have 
a much less effect on the employees. In fact the employees 
seem to feel that their share of the profits is really only a part 
of their wages which has been held back, and they feel some 
dissatisfaction at this condition. It is our belief that this is 
due to misunderstanding and to ignorance of business rather 
than to any defect in the plan, and we expect by education to 
overcome this, but have been so busy we have not had time to 
undertake the educational work up to now. In other words, 
it seems to us that profit sharing by itself is not assured of 
success unless there is educational work done with it. 

'We also are in some doubt as to the desirability of paying 
profit sharing in cash, but believe that it is much better if it 
can be arranged to pay in stock or some form of interest 
bearing securities. The relation of stock ownership is under- 
stood by every one, and the employee appreciates the stock 
he receives and understands what is the source of the income 
he receives from it. But a system of profit sharing where the 
returns are paid in cash seems to him only a method of paying 
a part of his wages in a way that is distasteful to him, or at 
least is apt to be so. We have, consequently, adopted an 
addition to our plan in the form of a participating note, which 
the employees are permitted to purchase with their profit 
sharing dividends or with other savings. As yet this priv- 
ilege has been extended only to a limited number of men 
occupying positions with some degree of executive responsi- 
bility. This includes salesmen, heads of departments in the 
office, foremen, assistant foremen and gang leaders in the fac- 
tory — about 100 all together. These notes seem to be highly 
valued, and the men have even borrowed money to invest in 
them. 

"The average number of our employees is about 1,000 at 
the present time, and perhaps two-thirds participate in the 



98 THE NATIONAL CIVIC FEDERATION 

dividend sharing. All who have been with us six months or 
more come in, even though in a small way, but to participate 
to the ful] extent an employee must have been with us at least 
three years. 

"The only changes have been those mentioned above, 
and the feeling of our employees, we think, was very excel- 
lent at first, but now is somewhat divided. This is perhaps 
due to the rapid rise in wage levels, which has unsettled the 
labor market generally and makes it less apparent that the 
dividend distribution is an addition over and above the usual 
earnings of the employee. The dividend sharing plan seems 
to have had a real influence in avoiding labor troubles, for 
the reason that the older employees receive a higher rating 
of distribution than do the beginners, and consequently do 
not wish to lose that advantage by going on a strike. This 
creates a restraining influence which undoubtedly has tended 
to avoid any agitation. We have had some dissatisfaction 
with the rates of wages paid, but believe this was unavoidable 
under the circumstances, but we have had no trouble with 
outside agitators. 

"The new participating note was put into effect a year ago 
this December, and the 100 men who are eligible have in- 
vested about 160,000." 

Clipper Belt Lacer Company, 
grand rapids, mich. 1912. 

(1916) From the profits of the year the company pays 
those employees who have been with it one year or less 5% 
of the amount received as wages during the year. This per- 
centage increases 1% for every added year of service until 
10% is reached, where it remains indefinitely. These pay- 
ments are made provided the profits for each year warrant it. 
There are about 50 employees. 

The results of the scheme are stated by the company to 
have been a reduction of 9% in the cost of production, an in- 
crease in the earnings of the employees of 19% and "a closer 
bond of fellowship with their employees." 

(1919) F. A. Stone, president, September 5: 

"Profit sharing is a subject of a good deal of importance 
at the present time and of a good deal of interest to us. We 



PROFIT SHARING REPORT 99 

were among the first to adopt this plan in our city, among 
the manufacturers — in fact we were the first — and we have 
noted a good many things that have shown us that it was a 
step in the right direction. For example, a number of new 
bank accounts were opened shortly after the employees re- 
ceived their money. It has also held our force together so 
that we have had very few changes, and we think profit shar- 
ing has had something to do with it, although we have tried 
in numerous other ways to make it to the advantage of our 
employees to be loyal to us." 

It is further stated that the special distribution plan, 
as described in 1916, is still in force, and has undergone no 
modifications. From 80 to 100 employees participate. 

Cobbs & Mitchell, Inc. 
manufacturers of wood floorings. cadillac, n. y. 1913. 

(1916) Employees who have worked for the company 
for one year are given 3% of the year's wages; those em- 
ployed two years, 6% of the previous year's wages; and those 
employed three years, 10% of the previous year's wages. 
Employees absent from duty must provide a substitute, or 
obtain a written excuse from the foreman and deposit same 
with the cashier. 

The proposition is stated to be separate and distinct from 
wages. 'The aim was to reach the employees in place of the 
heads of departments" and "to secure to us regular employ- 
ment of our men." The company considers that the scheme 
has already been a success. In 1914 $6,758.59 was paid to 
187 employees. 

(1919) W. E. Curry, general manager, September 11: 

"Our extra compensation or wage dividend plan is still 
i-n effect without any changes and we consider the results 
worth while. We believe it is generally regarded with favor 
by our employees and that it has had a distinct tendency to 
reduce labor turnover. It is our present intention to continue 
the plan indefinitely." 



100 the national civic federation 

Columbia Trust Company, 
new york city. 1916. 

(1916) The company has established a special fund, 
to consist of such moneys as the directors may appropriate 
from time to time. Five trustees are placed in full charge 
of this fund, a part of which is reserved for payment of pen- 
sions and death benefits, at the discretion of the trustees, and 
a part distributed as profit sharing. One-half of any amount 
in excess of $10,000 appropriated to the fund in any year 
constitutes the profit sharing allotment, and the distribution is 
in proportion to salaries and length of service. Only em- 
ployees who have been with the company one year or more 
are eligible, and after five years' service an additional allow- 
ance is paid, ranging from 10% on salaries to 40% to those 
employed 20 years or more, in part for distribution as profit 
sharing under specified rules and in part to provide a pension 
and benefit fund. 

(1919) L. W. Wiggin, vice-president, September 5: 

'This plan is still in force, and there have been no 
changes in it since December, 1915, when it was first put 
into effect. The average number of employees is 425 and 
practically every one participates in it." 

The company issues a booklet describing its pension, 
death benefit and profit sharing plans. 

Consumers' Company, 
coal, ice, building material. chicago. 

(1919) For two years the company has given its em- 
ployees of one year's service 5% of their year's wages or 
salary toward a first payment on stock. Since January 1, 
1916, the company has carried employees' life insurance, 
the amounts being after one year's service one-quarter of 
wages; two years, one-half; three years, a year's wages, in 
no case to exceed $2,000. Under its bonus plan out of 2,000 
employees 1,000 participate. 



profit sharing report 101 

Crane Company, 
CHICAGO, ill. 1900. 

(1916) Every year about Christmas time the company 
makes a cash distribution to employees, based upon their 
earnings during the year. This is not guaranteed, but the 
actual distribution for the past 13 or 14 years has been at 
the rate of 10% on wages, and in 1915 this involved a pay- 
ment of about $700,000 to approximately 10,000 employees. 
Every employee who has been in the service one month par- 
ticipates, except the officials and those who hold stock of the 
company. The distribution does not depend upon length of 
employment, amount of wages or efficiency of service. 

The. company many years ago started profit sharing 
among its employees by using a percentage of profits plan, 
copied after that originated by John Bright in England. 
Profits were not large and the payments being correspond- 
ingly small to the employees, there was lack of interest in 
the plan and no good results were accomplished. 

Later Mr. Crane introduced a stock subscription plan, the 
employees being permitted to buy stock outright to an amount 
equal to their yearly salaries. The percentage of employees 
who participated was small, many preferred to put their 
savings into homes, and unfortunate distinctions and sus- 
picion grew up between employees who owned stock and those 
who did not, especially in times of strikes. A number of 
years ago, when a disturbance arose, some of the employees 
who had stock were leaders of the strike and this so discour- 
aged the company that the stock participation plan was aban- 
doned. 

Later the company introduced the plan now in existence 
and described in the first paragraph above, but even this plan 
is not without its unsatisfactory features, as many of the em- 
ployees have grown to count upon it at Christmas and plan 
their expenses accordingly. Furthermore, the employees feel 
that the receipt of the bonus puts them under an obligation 
to the company, and they do not like to ask for an increase 
in wages, even when justly entitled to it. A recent and unin- 
tended development, discovered by one of the officials and 
discontinued, was the unfair practice, when taking on new 



102 THE NATIONAL CIVIC FEDERATION 

employees, of fixing the initial wage at such an amount that 
the added bonus would only equal the regular market wage. 

(1919) J. B. Berryman, first vice-president, Septem- 
ber 4: 

"Our special distribution plan was followed in Decem- 
ber, 1918, and will be in 1919 if the directors so decide. 
There has been no modification of the plan since its incep- 
tion, about 17 years ago. The number of employees who par- 
ticipated in 1918 was approximately 13,500. 

"We cannot say whether the plan has been the means of 
modifying labor troubles, but we had no trouble for 25 years 
until this summer when the shop men in Chicago went out 
without making any demands or notifying us of any cause 
for dissatisfaction, immediately after a vacation of one week 
with full pay. They were out between six and seven weeks, 
but are now back after an ineffectual attempt to force us to 
operate a closed shop controlled by the Federation of Labor,. 
at a wage scale which would mean eventual ruin. 

"In the opinion of the writer — speaking for himself only 
— there is nothing in any profit sharing when applied to 
workers by the day, hour or piece, as labor does not recognize 
lean years and is practically certain to strike should the 
profits of the business be insufficient to maintain the accus- 
tomed distribution. 

"In all discussions on this subject from the viewpoint of 
labor we always hear about profits, never about losses." 

The company issued an address by R. T. Crane, "On 
Practical Profit Sharing." 

Crane Valve Company, 
bridgeport, conn. 

(1916) (Now owned by Crane Co. of Chicago, and the 
same system of distribution has been adopted.) 

Crocker, Burbank & Co. 

PAPER MANUFACTURERS. FITCHBURG, MASS. 1908. 

(1916) Employees who have been with the company 
for two consecutive years are paid, on December 1 of each 
year, a 5% dividend on their wages earned during the 12 



PROFIT SHARING REPORT . 103 

months ending on that date. Employees who have been with 
the company five consecutive years receive on July 1 an 
additional 5% on their yearly wages. There are between 
900 and 1,000 employees, of whom 700 participated in the 
last dividend. The company states that it has found each 
year that the number of employees who have been in its 
service for two years or more is increasing, and that it there- 
fore considers the plan a success. 

Edw. C. Grossett. 

NEW YORK. 

(1919) Mr. Grossett writes, November 21: 

,4 The various companies in which I am interested use 
profit sharing to a very small extent. About 15 years ago 
we tried such an arrangement in a limited way at one of our 
plants in connection with some of the heads of departments, 
and it did not prove very satisfactory. 

"A part of the profits in the lumber business are derived 
from the appreciation of standing timber, and it always 
proved difficult to determine accurately to the satisfaction of 
all concerned how much of such appreciation had accrued in 
any one year. The lumber business is always affected by 
general business conditions in the country, although, as a 
rule, the effect is not felt until 12 or 18 months after the 
immediate cause. We found it frequently happened that 
those men who participated in the profit sharing arrangement 
felt a considerable disappointment when their share of the 
profits in the business were lessened by the poor year when, 
as explained above, such year usually came after general 
business conditions in the country had suffered a setback and 
frequently were again on the up grade. 

"For these reasons we have discontinued all outright 
profit sharing arrangements and, instead, so far as possible, 
arrange to help the heads of departments and the more valu- 
able men in our operations to purchase outright stock in the 
companies with which they are connected. We have also 
what we call our "loyalty fund" by which, at the end of each 
year, all employees receive a certain bonus based on their 
regular wage, the per cent determined by the number of 
years continuous service. We have found that this arrange- 
ment has been very satisfactory. 



104 THE NATIONAL CIVIC FEDERATION 

'We still use to a small extent a profit sharing arrange- 
ment in our western companies where we have separated the 
operation, having one company which owns all natural re- 
sources and other companies which do the operating. In this 
way we avoid any complication as to the appreciation of 
natural resources." 

Dempster Mills Manufacturing Company, 
beatrice, nebraska. 

(1919) C. P. Dempster, president, September 30: 

""We have had a profit sharing plan with our employees 
for the past 15 years, which embodied a part of the principles 
outlined by Mr. Perkins. . . . We have, however, been 
paying these profit sharing dividends in cash in two semi- 
annual payments. 

'This plan has not been the success which we expected it 
would be, and we think that the reason it has not been a 
greater success is for the reasons as stated by Mr. Perkins, 
that is, we believe that if these profit sharing dividends were 
invested in the business by the employees in some manner 
that we would get much better results, and we are arranging 
to change our plan accordingly. 

4 We have gone over Mr. Perkins' plan carefully and 
agree with him, with the exception of the length of time that 
should elapse before the employee is permitted to withdraw 
the profit sharing dividends. We believe that the employee 
should leave his dividends invested in securities of the com- 
pany for a period of not less than ten years, unless he severs 
his connection with the company, and even then if he severs 
his connection with the company within three years he would 
not be permitted to draw any of these dividends. After three 
years he would draw one-half of the amount to his credit. 
At the end of ten years he could draw the whole amount, 
together with the amount that has accumulated thereto." 

Detroit Lubricator Company, 
detroit, mich. 

(1919) G. B. Duffield, factory manager, December 12: 
'We operate our production work entirely on a straight 



PROFIT SHARING REPORT 105 

piece-work basis and have never contemplated a bonus or 
profit sharing plan. We did, however, institute at the begin- 
ning of the war an arbitrary fixed bonus in which only 
foremen and department heads participated. This was en- 
tirely a war expedient to compensate for the adjustment of 
the times, but the arrangement has been permitted to con- 
tinue and possesses some credit. An arbitrary percentage 
based on each week's pay is presented in the form of a check 
at the end of the month. 

"From the writer's observation, the most successful profit 
sharing plans are those which include the skeleton of a back- 
bone of an organization and permit those employees to benefit 
in a material way in place of distributing the same amount 
over a greater area, as the average earner is not satisfied with 
a participation in earnings and responds more promptly to 
direct payment." 

Diamond Chain and Manufacturing Company. 

indianapolis, ind. 

(1919) Guy A. Wainwright, vice-president, Novem- 
ber 10: 

"We have no profit sharing plan as the term is commonly 
accepted, and do not contemplate installing one. We believe 
such a scheme is too indirect and too complicated to obtain 
results among employees — with the possible exception of im- 
portant department heads. 

"We have lately tried a method of estimating profits for 
the ensuing year, apportioning a certain amount to be dis- 
tributed as direct wages and then applying this amount to our 
hourly rates. No attempt is made to explain this to em- 
ployees, and the only evidence of it is the fact that we are 
paying relatively high wages, and that we are requiring, by 
individual records, that each person earn the wage that he 
is given. 

"We have no labor troubles or tendency toward labor 
trouble, and the spirit of co-operation throughout the entire 
organization is most satisfactory. We maintain an absolutely 
open shop," 



106 the national civic federation 

The Diamond Match Company. 

NEW YORK. 

A labor dividend is paid to certain employees twice each 
year based on length and continuity of service. 

Labor benefits by getting a share of the earnings of the 
company after capital has received a reasonable and fixed 
return on the investment. During the past few years this 
labor dividend has been paid semi-annually to employees 
who have have been in the service of the company for a 
period of six months or more and who, during the last six 
months, had not been absent from their duties more than 
fourteen days except with the approval of their superintend- 
ent or foreman or, in case of sickness, certified to by a com- 
petent doctor or accepted authority. 

The amount of dividend received by each employee 
varies with the wage and the length and continuity of service. 
A worker who has been with the company twenty years, by 
the plan obtains twice the dividend of a worker who has been 
with the company one year, their wages during the last six 
months being the same. The plan in effect this year stipulates 
that capital is entitled, first, to eight per cent, of the total 
amount invested in the business; and that of the earnings over 
and above this amount one-quarter shall be set aside and paid 
to management and labor, every official and employee of the 
company, other than the President, profiting by the plan. 

Diamond State Fibre Company, 
bridgeport, pa. 1915. 

(1916) The company announced in December, 1915, 
that dividends to labor would be paid every three months if 
the results proved satisfactory, on the condition that "there 
will be no dividends when there are no profits.*' The dis- 
tribution will be based on the wages earned by the employees 
during the previous 13 weeks, and the profits earned by the 
company during the same period. The first dividend, paid 
January 1, 1916, amounted to 6% on the employees' wages 
for the 13 weeks ending December 18. 

(1919) J. A. Ranck, secretary and treasurer, Novem- 
ber 12: 



PROFIT SHARING REPORT 107 

"We introduced a form of profit sharing in 1915 and 
discontinued it within the last six months, in so far as applied 
to the rank and file of our employees, but it is still in effect 
with the heads of departments. 

"The average number of employees at this time is ap- 
proximately 1,200. When we first adopted this plan the 
employees were heartily in favor of it, and for the first year 
there was little or no dissatisfaction, but as wages were con- 
stantly advanced the percentage of profit which was shared 
was somewhat reduced, and this seemed to cause quite a good 
deal of dissatisfaction. At any rate, the profit sharing plan 
did not modify in any way the tendency toward dissatisfac- 
tion in the ranks of our labor, so that it was really not a suc- 
cess in any measure, and, as before stated, we have aban- 
doned it." 

Henry Doherty Silk Company. 

CLIFTON, n. j. 

(1919) William H. Doherty, vice-president, Novem- 
ber 10: 



r e have never heard of any simple and practical plan 
of profit sharing that appears to us to be entirely satisfactory 
at all times and under all conditions. But when father died 
there was established the Henry Doherty benefit fund, which 
is very simple and workable and very satisfactory, and we 
think it has strengthened the good will, of our employees. A 
pass-card is handed to each employee as soon as he or she 
begins to work for us, and the benefit starts immediately." 

The Dold Company. 

PORK AND BEEF PACKERS. BUFFALO, N. Y. 1913. 

(1916) Rewards for promptness, efficiency and cour- 
tesy, in the form of prizes, are distributed by the company 
annually through the medium of an employee's mutual bene- 
fit association. The distribution is in fixed amounts based 
upon the profits earned by the company. In addition, there 
is a cash bonus to such of the foremen as are considered to 
have earned it, upon the same grounds. It is reported that 



108 THE NATIONAL CIVIC FEDERATION 

the amount distributed to 15 of the 34 foremen at the end of 
1915 was about $2,000, while more than $16,000 was 
divided among approximately 700 members of the employees' 
association. 

(1919) Letters from the treasurer, the secretary and 
the general manager agree as to the continued success of the 
company's plan. The treasurer writes, November 11: 

"Our profit sharing was first put into operation in 1912. 
So far as we have been able to ascertain, we were the first 
packers in the country to adopt profit sharing. All employees 
who have been in our employ for one year or more are en- 
titled to participate. The average number of our employees 
is about 1,800. 

'There is an annual distribution of bonus to all employees 
in the plant and office, and a larger bonus given to depart- 
ment foremen. After all plant, clerical and department fore- 
men have received their bonus, there is a 10% division of the 
balance of the net profits made to the junior and executive 
councils and the managing committee. 

"In addition to the annual bonus system outlined above, 
in July of this year we distributed a 'special peace bonus' of a 
substantial amount of our net profits shown at that time, dis- 
tributed on the same lines as above outlined, all of which is 
based on salary and wages earned. 

"The feeling toward the plan on the part of our em- 
ployees, so far as we are advised, is good. We have had no 
labor troubles since the inauguration of this system. 

"In addition to the bonus system above outlined, we have 
gone extensively into welfare work; into the organization of 
our employees, into group insurance and other features which 
by co-ordination and co-operation tend to unify and congeal 
our employees into one great mass." 

The secretary of the company writes: 

"It is with pleasure we can state since the inauguration 
of our mutual protective association and the profit sharing 
proposition there has been no kind of trouble that caused us 
any annoyance or any distress. We pride ourselves upon the 
loyalty of our house, and the only union that is in effect is 
their own union in the house. 

"In the matter of insurance, which is quite an item, the 
company contributes a large share of the premium, the asso- 
ciation paying about one-sixth." 



PROFIT SHARING REPORT 109 

A booklet describes the company's plans. 

The Eddystone Manufacturing Company. 

prints and art draperies. philadelphia, pa. 

(1919) W. P. Simpson, president, November 12: 
"The plan under which we are now working is for the 
board of directors to set aside from the earnings at the end 
of our company's fiscal year such sum as in their opinion is 
warranted, to be distributed by classes, down to and includ- 
ing foremen. This practice has not been extended to the 
rank and file. This method we have thus far found to be the 
best in our particular organization and has proven successful. 
We realize that profit sharing in some form is a coming and 
desirable factor in business, but has to be protected against 
the evil sides of human nature. When this has been safe- 
guarded against and a plan developed to suit the local con- 
ditions and installed gradually so as to fit in and fairly protect 
all interests, in that case profit sharing will be a success." 

Fels & Co. 

MANUFACTURERS OF SOAP. PHILADELPHIA, PA. 1901. 

(1916) A percentage of wages, based on length of serv- 
ice, is given at the end of each year. There is one rate for 
those employed less than three years and a higher rate for 
those employed more than three years. All regular em- 
ployees are included. The company considers that the plan 
"is a success in many respects, but has some features not 
satisfactory. We have reason to believe that most make very 
good use of the portion received, but some do not. 
As in most profit sharing schemes there is an element of arbi- 
trariness which must be got over before profit sharing can 
be said to be unqualifiedly a success." 

(1919) From a member of the firm: 

'The date of the installation of our plan was 1901, and 
it has continued in force ever since with modifications from 
time to time. With the exception of a bonus to all employees 
in addition to wages, which war conditions made desirable, 
the number of persons participating in the sharing of profits 
at the time of distribution was 416 out of a total number of 
733. 



110 THE NATIONAL CIVIC FEDERATION 

'The feeling toward the plan among those benefited has 
always been favorable, but the distribution has developed a 
feeling among many that it is a part of wages. We do not 
know definitely what effect it has had toward eliminating or 
modifying the tendency toward labor troubles. We have not 
had much of that kind of thing. Of course, during the diffi- 
culties of the war and since it has probably had a steadying 
influence. 

"The plan includes all employees except heads of depart- 
ments. It is a success so far as it goes, but our former objec- 
tion still exists and such a plan does not help much towards 
a real solution of the labor question. There should be some- 
thing more fundamental." 

Ferracute Machine Company, 
bridgeton, n. j. 1915. 

(1916) On account of prosperous business, the com- 
pany in 1915 paid bonuses on wages earned by employees 
amounting to 5% for the first six months of the year, 7% for 
the next three months, and 10% for the last three months. 
For the first quarter of 1916 it is expected that the payment 
will be 10%, but whether it will be continued thereafter the 
company is not in a position to state. There are about 200 
employees, all of whom participate. The company considers 
the plan satisfactory and states that "we prefer this arrange- 
ment rather than suddenly advancing the wages because it is 
naturally easy to advance the wages but it is very hard to 
lower them." 

(1919) E. Paullin, secretary, October 16: 
"For the last two years we have been paying a special 
bonus or premium — it is what we term a "service bonus" — of 
25% of the wages quarterly where the person has been in our 
employ for a year or more, and for less than one year 20 %, 
with the understanding that the employee remains in our em- 
ploy until the end of the quarter and that he is not absent ex- 
cept for sickness or some satisfactory cause, beyond a maxi- 
mum time that we agree upon. We have found this arrange- 
ment quite satisfactory." 



profit sharing report 111 

Frost Gear and Forge Company, 
jackson, mich. 

(19.16) After setting aside 10% for stockholders, a por- 
tion of the excess profits is divided among certain employees 
in proportion to salaries, but participation is limited to fore- 
men and those above them, including officers of the company. 
The company states that: "The workmen in the shop do not 
participate, but get their extra incentive from the ordinary 
piecework which we employ in the forge department, or 
premium which we use in the gear department." (Not true 
profit sharing, under standard definition.) 

The share of profits received by officers and foremen is 
not paid in cash, but stock representing the share of each is 
held in the treasury for three years, when it is issued to the 
individual whether he is then in the employ of the company 
or not. Dividends on this stock are paid in the meantime. 

The company states that its object was to tie to it the men 
who have been faithful and who have taken a lively interest 
in the welfare of the business. As profits increase the per- 
centage set aside for employees becomes greater, it being the 
company's expectation that this "would spur the employees 
to a very extra effort," and, further, that although the plan 
is not entirely satisfactory the company is not able to devise 
one that will meet the requirements any better. 

(1919) E. J. Frost, president, October 28: 

"We have not made any change in our method of paying 
bonus." 

Gardner News Company, 
gardner, mass. 1916. 

(1916) On February 1 the company issued a letter to 
its employees, eleven in number, not including officials, to the 
effect that it did not feel justified in increasing their wages, 
believing the existing scale equal to that found in similar 
offices, and that under less prosperous conditions it might 
prove necessary to withdraw such increase if made. Instead, 
there would be paid on the first day of February and of Au- 
gust, to employees who had been with the company for more 
than one year, a certain percentage of the gross business trans- 



112 THE NATIONAL CIVIC FEDERATION 

acted during the preceding six months, in each case, in pro- 
portion to the wages of each individual. 

(1919) S. W. Rogers, manager. September 4: 
"The company's special distribution plan, described in 
1916, is still in force. The high cost of living has brought 
a demand for more frequent payment of bonus, which in 
some cases has been made in weekly payments on our own 
judgment. Our single employees like the original plan very 
much and are contented. It has been found that the profit 
sharing plan has been the means of modifying the tendency 
toward labor troubles. This plan affects all employees with 
the exception of the manager." 

Garner Print Works and Bleachery. 
garnerville, n. y. 1916. 

(1916 ) On the first of January about 500 employees of 
the company were awarded a bonus of 10% on wages, in 
proportion to efficiency. The rank and file as well as heads 
of departments are eligible. It is stated that the bonus will 
be figured on weekly earnings but paid at the end of each 
month, and that the payments at present amount to about S800 
per week on a pay roll of approximately S8.000. 
(1919) H. A. Hatch, treasurer. October 1: 
* \\ e introduced an entirely new system — profit sharing — 
about a year ago. Perhaps this would be better described 
now as a partnership system as we have this year amended it 
so as to give an equal share in management to labor. The 
plan includes every one in the employ of the company. This 
number averages 1.500. To the best of mv knowledge the 
plan is successful. W e have had no labor troubles and have 
at all times had an ample supply of labor. At present we 
have a considerable waiting list." 

The resolution of the board of directors dated July 17, 
1919, authorizing the new joint committee which is to be 
known as the board of management is as follows: 

"Resolved, that a committee be and hereby is appointed, 
to consist of six members, three of whom shall be the treas- 
urer of the company, the local agent, and the New 1 ork 
agent, and the other three shall be elected by the board of 
operatives of the Dutchess branch from their number: that 
said committee of six be and herebv is authorized to settle 



PROFIT SHARING REPORT • 113 

and adjust such matters of mill management as may arise, 
and shall meet upon the call of any two of its members. 
In case a majority of the said committee should fail to 
agree upon any matter brought before it for determination, 
the said committee shall thereupon appoint a seventh mem- 
ber, and the decision of the majority of the committee so 
constituted shall be final." 

In May a distribution of profits was made among em- 
ployees for the last six months of 1918, and in August 4% 
on wages for the first six months of 1919. Printed matter, 
describing its "democratic control," is published by the com- 
pany. 

General Chemical Company. 

NEW YORK. 1915. 

(1916) This plan has been changed from time to time. 
The one in operation in December, 1915, is described by the 
company as follows: 

; 'This year the distribution of the profit sharing fund 
goes not only to the managers, heads of departments and 
superintendents, but also to every other employee of the 
company. For the managers a more or less arbitrary 
amount was set aside, but the men were paid on the basis 
of 10% of wages received to all who have been with the 
company for a year or longer and 5% to those who have 
been with the company less than one year. This bonus was 
paid in cash. In the case of the wage-earners in many in- 
stances, we distributed pass-books on local savings banks 
after arranging with the banks to keep open two or three 
evenings in order to permit the men to take as much or 
little of the bonus away in cash as they themselves desired, 
it not being our intention in any way to control the money 
after it once passed into their hands. It is of interest to 
note that in many cases we have reports that a large per- 
centage of the men in the reporting factories have left their 
entire bonus in the local savings banks. We regard the 
distribution as only an evidence of our desire to establish 
a real spirit of co-operation between the stockholders and 
the workers." 

(1919) Robert K. Painter, assistant general manager, 
September 11: 

"No change in our special distribution plan since 1916." 



114 the national civic federation 

General Electric Company, 
schenectady, n. y. 1916. 

(1916) The company has announced under date of 
March 18 that a sum has been set aside sufficient to permit 
the payment, to all employees (other than directors and gen- 
eral officers), who have been in its service continuously for 
five years or more, of a supplementary compensation equiva- 
lent to 5% of their individual earnings for the six months 
ended respectively June 30 and December 31, 1916. It has 
been estimated that these distributions will amount in the ag- 
gregate to between $3,000,000 and $5,000,000. There are 
about 50,000 employees in all the plants of the company, of 
whom a very large proportion have been in the service at least 
five years and are therefore eligible to participate. 

The company also has in operation, at its Schenectady 
plant, an investment club through which employees may in- 
vest their savings in stock of the company upon payment of 
$5 per month. This requires a saving of $60 per year for 
a period of about three years, to complete the purchase of one 
share. Early in 1915, shortly after the organization of this 
club, it had attained a membership of 800 subscribers. 

(1919) M. F. Westover, secretary, September 4: 

"The plan for semi-annual payment of what is called 
'supplementary compensation' is still in effect. The pay- 
ment for the six months ended on June 30, 1919, was made 
to 22,351, the total number of employees at that time being 
about 67,000. 

''There has been no change in the plan since it was 
adopted and, while it cannot be affirmed that there has been 
any definite effect in preventing labor troubles, the payment 
is very acceptable to the employees, and it is safe to assume 
that it has reduced the labor turnover. The payment is made 
to all employees except executive officers of the company." 

NELA PARK, CLEVELAND, OHIO. 

(1916) The investment plan of the National Lamp Works 
of Cleveland presents an illustration of the great risk an em- 
ployer takes when he assumes the responsibility of aiding his 
employees to make investments. In 1911, the executive heads 
had devised, by a leading securities company, a plan under 



PROFIT SHARING REPORT 115 

which there were organized two investment companies to 
receive the deposits of the employees of the different lamp 
works. They were termed the "Nela Alpha Investing Com- 
pany" and the "Nela Alpha Anticipation Company." Heads 
of departments and office employees in all the plants were 
allowed to deposit a certain percentage of their monthly 
salaries. The intention was to include the rank and file by 
means of a stamp system but this was not carried out. 

The sincerity of purpose in this undertaking is indicated 
by the following extract from a letter written by F. S. Terry, 
leading official of the Lamp Works, May 9, 1912: 

"Our opinion is that we shall benefit our employees as 
much by inducing ihem to save their money as by any form 
of profit sharing distribution, and we are doing all we can 
to acquaint them with the character of different classes of 
investments so that their savings will neither be invested in 
government bonds nor in savings banks, both of which 
yield small returns nor, on the other hand, will they be in- 
vested in highly speculative enterprises where the risks are 
liable to be too great." 

Certificates of participation in the Investing Company 
were issued to savers whose deposits had reached $100. Af- 
ter having paid in given amounts (decided upon by the or- 
ganizers), the savers received common stock certificates which 
participated in the surplus earnings over and above 6% on 
the preferred stock. 

Through the Anticipation Company, funds similarly re- 
ceived were invested in speculative stocks and new offerings, 
such as the common and preferred stocks of leading public 
utilities. The promoters of the plan reserved the privilege 
of transferring or assigning all their rights thereunder, at 
any time, and expressly stipulated in the subscription agree- 
ment that no fiduciary relation of any kind was assumed nor 
any obligation to undertake or carry out the plan. 

For several years past, the stock of the Investing and An- 
ticipation Companies — that purchased by the employees — has 
had no market value except that made by the holders (men 
and women) as they have sold to one another, for the reason 
that some of the securities held by those two companies had 
a severe shock. Three years ago, for example, the stocks of 
one of the public utilities, in which part of the funds of the 



116 THE NATIONAL CIVIC FEDERATION 

foregoing companies had been invested, sold as high as $144 
but since that time has been as low as $40 per share. Quite 
recently that particular stock has almost regained its original 
market value.* However, the anxiety of the officials of the 
Lamp Works (who went so far as to try to protect the em- 
ployees' funds with their own money and to have a broker 
popularize trading in the preferred stocks), as well as the dis- 
turbed mental state of the depositors, who could not at any 
time realize on their investments except at a great loss, indi- 
cate the unfortunate situation which may arise from such rec- 
ommendation of industrial investments where the employees 
are not guaranteed against depreciation in the market value 
of the securities. In this instance, a committee, consisting of 
the chief officials and others, was appointed to superintend 
the investing of the employees' funds; but the experience 
shows what blunders may be made by big business men, even 
with the best intentions. Also, there has been created a ten- 
dency on the part of the employees to take an interest in the 
stock market not regarded as wholesome. 

(1920) The latest developments in connection with this 
effort, furnished by A. V. Simis, are given below: 

NELA ALPHA INVESTING COMPANY. 

"There are approximately 400 stockholders of this com- 
pany and, with a few exceptions, all of the stockholders are 
employees of the company. Most of the common stock is held 
by the managers of the National Lamp Works and the man- 
agers of the various departments. 

"There is little or no trading in the common stock, which is 
held by those who are in sympathy with the policy of main- 
taining a large surplus for the protection of the preferred 
stock. Only the preferred stock is traded in by the em- 
ployees, and at a fixed price per share — there being no effort 
or inducement to interest the employees in the common stock 
of the company — and a market is always afforded for those 
who wish to buy or sell at this price. The preferred stock 
has a par value of $10.00 per share, and the stock is bought 
and sold at the fixed price of $8.50 per share. This stock 
pays 6% per annum which, at the above price, nets the holder 

*Later it went beyond the high point quoted. 



PROFIT SHARING REPORT 117 

about 7% . The policy of maintaining the market at this price 
has resulted in taking the preferred stock out of the specula- 
tive class entirely and employees have learned to regard the 
stock as the means of obtaining a return of 7%, together with 
the privilege of securing the return of amount invested upon 
request. The result has been that during the years an in- 
creasing amount of this stock has been distributed among the 
employees with little or no sales effort on the part of the 
company. 

"In addition to the privilege of purchasing the preferred 
stock, the employee is free to purchase the 4% notes of this 
company, which are honored at any time with interest at 4% 
for the period held, or which can be converted into the pre- 
ferred stock at any time desired by the employee. 

"During the year 1919 there was sold to employees pre- 
ferred stock to the amount of $89,170 par value, and there 
was purchased from employees preferred stock to the amount 
of $64,350 par value. During the same period there was 
sold to employees 4% certificates of indebtedness to the 
amount of $57,400, and retired, $52,580. Of the notes re- 
tired, $5,000 was used by employees in the purchase of pre- 
ferred stock. 

"The common stock has been maintained on a 6% divi- 
dend basis, and the balance of earnings has gone into surplus, 
with the result that at the present time the surplus is about 
equal to the preferred stock issued and outstanding and, as 
above stated, it is the policy to maintain at all times a sub- 
stantial surplus for the protection of the preferred stock. 

"It has been our experience that this plan of saving and 
investment is looked upon favorably by the employees as it 
gives them a larger return than they can get in the savings 
banks, together with safety and a ready market when they 
desire to dispose of their securities. 

NELA ALPHA ANTICIPATION COMPANY. 

'This company, when originally organized, was not 
offered as a savings or investment proposition. No effort 
was made to interest the employees generally and the stock- 
holders are those who desired something of a speculative 
nature under what was considered to be favorable circum- 



118 THE NATIONAL CIVIC FEDERATION 

stances. This company was organized in 1911, and the three 
classes of stock, to wit: first preferred, second preferred and 
common stock, have been on a cash dividend basis of 6% for 
several years, and the company has built up a surplus which, 
at the present time, has a ratio to the first preferred stock of 
more than 4 to 1. It will thus be seen that the company has 
operated successfully. The only criticism which has been 
directed toward this company has been that, by reason of its 
small capitalization, there has been no ready market for its 
securities with the result that some of the stockholders, desir- 
ing to dispose of their holdings, have difficulty at times in 
finding buyers. However, plans are now under consideration 
for establishing a market which will overcome this objection." 

The General Fireproofing Company, 
youngstown, ohio. 

(1919) Since December 16, 1916, the company has 
been paying a bonus of 4% on regularity of attendance dur- 
ing a pay term and another of 12% for regularity during a 
period of six months. In case of death the latter bonus is 
paid to the heirs. 

The Globe Tobacco Company, 
detroit, mich. 1886. 

(1916) Peculiar arrangement by which company 
handed over to labor union 1% of gross receipts, to be paid 
to employees pro rata. Necessitated because state laws pre- 
vented the plan of co-operation desired by the company. 
The latter enthusiastic at the time of publication by N. P. 
Gilman (1889). 

The B. F. Goodrich Company. 

AKRON, OHIO. 

(1919) H. Hough, comptroller, November 13: 
4 We have had in force for some time throughout our 
shops what is known as a pool system of paying wages, which 
insures a minimum wage and a bonus for production in ex- 
cess of certain stipulated amounts. As regards office em- 



PROFIT SHARING REPORT 119 

ployees, we last year paid 'additional compensation' of 25% 
on the total amount of salary drawn throughout the year, and 
a similar declaration will be made on December 1 next on 
salaries for 1919. 

''This company is now seriously considering some general 
plan of allowing all employees to participate regularly in the 
profits of the company, but we have not as yet reached any 
definite conclusions as to the method which will be em- 
ployed." 

The Great Western Sugar Company, 
denver, colo. 

(1919) R. K. Marsh, vice-president, November 14: 
"This company's business is that of making sugar from 
beets. For a number of years we attempted to formulate a 
plan whereby we could offer to each of the men in our employ 
a share of profits, based on some standard, over and above 
the standard, where such additional profits could be definitely 
associated with increased efforts and efficiency of each man. 
Due to the nature of our business we were unable to formu- 
late a plan along this line satisfactory to us. We therefore 
then began work along a line where we would set a standard 
for each of our plants, considering each plant a unit rather 
than each man. If the whole plant exceeded this standard a 
certain share of the profits would be paid to the employees of 
that plant and be pro-rated equally among them. This plan 
we put into effect for the first time at the beginning of our 
present beet slicing campaign, which was only about a month 
ago. It is, therefore, too soon to judge the results." 

Gurney Ball Bearing Company, 
jamestown, n. y. 

(1919) Henry K. Smith, president, November 29: 
"Our plan is not profit sharing, pure and simple, but 
rather a bonus distribution based upon the prosperity of the 
business. The directors set aside a certain amount at the 
end of the year to be divided among employees of one year's 
or more continuous service upon a certain basis of distribu- 
tion. Last year's distribution was: One year's continuous 



120 THE NATIONAL CIVIC FEDERATION 

service, 4%; two years', 1% additional; three years', 1% 
additional; fifty weeks full time attendance, 1% additional. 
Foremen and salaried employees, 7%% straight. 

'We do not believe that profit sharing has much — if any 
— beneficial effect. The same amount of money paid in 
weekly wages would be far more satisfactory to the average 
man. Labor generally is so transient, and the attitude of the 
average employee is that something deferred for twelve 
months might as well happen in another planet, so far as im- 
mediate effect on him is concerned. 

'We consider our method of distribution as an absolute 
measure of justice. The men who stay more than twelve 
months are the ones who are responsible for making a profit. 
Without them, as the framework of the organization, the busi- 
ness probably could not operate at all. If two men of equal 
value were to come to us on the first day of January, one stat- 
ing that he would work the whole year and the other that he 
would only work four, six or eight months, we would gladly 
pay the steady man a larger amount of wages. We can only 
determine who is the steady man at the end of the year and 
try and give him the extra compensation which he has earned 
in this way. 

"'During the general strike in this city, this plan and one 
other, which have profit sharing or bonus distribution in 
effect, were the only ones which were not affected. In my 
opinion, however, the profit sharing system was not respon- 
sible for this condition but might have had some slight bear- 
ing upon it. 

''Our system has been in force since January 1, 1916. 
The number of employees who have benefited under it has 
never been 50% of the total, but this is due to the fact that 
this business is growing very rapidly and has a large number 
of new employees who have not been with us a year." 

Hager & Bro. 

department store, lancaster, pa. 

(1919) From the manager, November 10: 
"Our department heads are given an interest in the net 
profits of their particular departments. We have given our 
employees group life insurance, which starts after the first 
year's employment; §500 minimum, §2,000 maximum." 



profit sharing report 121 

Haines, Jones & Cadbury Company, 
makers of plumbing supplies. philadelphia, pa. 1886. 

(1916) An officer of the company states: 

"About thirty years ago we adopted a plan of distributing 
money among our employees based on our profit and based 
on their wages or salaries. When we had good years this, of 
course, was satisfactory to our employees, but when the poor 
times came they were dissatisfied and after trying it for about 
five years, we discontinued that plan. 

"For about twenty years, we had a plan of making a 
cash disbursement to certain of our employees that we thought 
were entitled to it. This was not based on their wages but 
was an arbitrary matter passed upon by the president of our 
company. 

"For the past few years, we have set aside from our earn- 
ings 5% on the capital invested in our business, charged off 
for bad debts, depreciations, etc., and then took 25% of the 
balance and put it into a fund for distribution among our 
employees. The employees were divided into two classes, 
one class getting about 90% of this fund and the other class 
about 10%. 

'We employ from 350 to 500 people. This cash dis- 
bursement is made mostly to department heads and some of 
the rank and file and includes about fifty. 

"Our branch stores are operated on rather a different 
plan — the manager getting a certain percentage of the profits 
and then if we make over a certain amount we distribute 
2l/o% among the employees of the branch — taking in mostly 
the heads of departments and not paying very much atten- 
tion to the rank and file. 

"Our salesmen operate on a profit sharing contract but 
it is most too complicated to undertake to explain. The ar- 
rangement which we have made with our salesmen has been 
quite satisfactory and the last plan which we have adooted 
for distribution of cash bonuses has been more satisfactory 
than any that we have previously adopted, but it is not entirely 
so because a great many of our employees do not thoroughly 
understand the difficulties of conducting a large business and 
that the profits vary greatly in different years depending upon 
conditions oftentimes which are entirely beyond the control 



122 THE NATIONAL CIVIC FEDERATION 

of the management. Our people are beginning to understand 
it, however, better and better every year and we believe that 
we have made some progress and that the arrangement has 
been a beneficial one to our interests." 

(1919) J. H. Boston, president and general manager, 
December 24: 

"In the early part of this year we arranged to discontinue 
one or two of our profit sharing plans on account of reorgani- 
zation in our business. We have in effect a plan which shares 
profits with our branch managers. This is based on the net 
earnings. We also have an arrangement with our salesmen 
similar to that which we had before. 

6 We have never felt that the plans which we had adopted 
were entirely satisfactory. We are inclined to believe that 
no plan which is based on the net earnings from year to year 
can be made satisfactory when it is applied to all of the em- 
ployees, as a great many of them do not understand the fluc- 
tuations in market conditions and they are dissatisfied if one 
year they get a large bonus and the next year a small one. 
We have found, however, that our managers understand the 
situation and arrangements of that kind can be worked to 
good advantage with them." 

Hawthorne Furniture Shops, 
manufacturers, los angeles, cal. 

(1919) W. E. Ross, manager, November 17: 

"A profit sharing system that we installed on March 1 
this year is still in force, and we consider that it is working 
fully to our expectations. We now have about 275 eni|- 
ployees, and all participate, including factory, office and 
selling forces. Our employees seem to believe in the plan 
and are very much pleased with it, and we feel that the effect 
has been to heighten the morale of our working forces to a 
degree that would not have been possible in any other way." 

Hendrick Manufacturing Company. 
carbondale, pa. 1916. 

(1916) Each man and boy, numbering approximately 
250, who has been in the employment of the corporation a 



PROFIT SHARING REPORT 123 

year or over, received on February 22, 1916, a bonus of 
5% out of the profits which the company made during 1915. 
These employees do not include the office force. 

Many of the men employed by the company have held 
down their jobs from boyhood almost to old age. The men 
employed in the various departments are all experts in their 
several lines, even among the laborers. 

Not a man who is the beneficiary of it had the slightest 
idea until he opened his pay envelope that he was to receive 
a substantial bonus with his wages. Not a single order was 
accepted by the company last year for war material. 

(1919) W. T. Coiville, vice-president and treasurer, 
September 9: 

"Our plan as described in 1916 remains substantially 
in force in principle, though somewhat broadened in scope 
and graduated in percentages paid in accordance with length 
of service. 

'We are paying this year to all employees, including 
office force and heads of departments, from 3% to 10%, de- 
pending upon the length of continuous service. Payments 
are made in quarterly instalments, during the current year, 
on the first day of April, July, and October, and on Decem- 
ber 31 to such employees only as are still in the employ of 
this company on these respective dates. Basis on which the 
percentages are computed is the total amount of wages re- 
ceived in 1918 exclusive of any bonus paid in 1918. 

"Too many factors enter into labor conditions to warrant 
us in saying that our comparative freedom from labor 
troubles is due to our plan of distribution of profits. The 
most we can say is that such distribution is possibly one of 
the factors. Whether it has resulted in longer continuous 
service is also uncertain." 

Hercules Powder Company, 
wilmington, del. 1913. 

(1916) The employees were divided into five classes, 
according to length of service from one to fifteen years, and 
announcement was made that wages of the employees in the 
several classes would be increased from 2 to 20% respect- 
ively. While termed a "wage increase," however, the com- 



124 THE NATIONAL CIVIC FEDERATION 

pany also refers to it as a "bonus," of a purely voluntary 
character, and "reserves the right to withhold it for justifiable 
reasons, either permanently or temporarily, from any indi- 
vidual or all employees." It was the intention of the com- 
pany to continue the plan indefinitely, "providing we secure 
the co-operation of our pay roll employees in the faithful 
performance of their duties and adherence to the company's 
rules and our men make it evident that they desire to benefit 
by the increases provided through continuous or uninter- 
rupted service." 

(1919) C. F. Eastman, assistant treasurer, September 
4: 

c We have a plan enabling employees to purchase the 
company's stock on easy payments, the stock carrying a cer- 
tain distribution contingent on faithful service, in addition to 
the regular dividend. This plan was suspended for 1918 
and 1919 due to abnormal war conditions, and the desire 
to have our employees subscribe as largely as possible to 
government offerings of liberty bonds. We also have a stock 
bonus plan for awarding employees whose services have 
shown special merit. This plan was also temporarily sus- 
pended due to abnormal war conditions." 

The company distributes plan booklets. 

Hibbard, Spencer, Bartlett & Co. 

HARDWARE. CHICAGO, ILL. 

(1916) At the end of each year, from the profits of the 
business, employees receive a certain percentage of their 
salaries, varying according to length of service. In 1914 the 
percentage was: one year's service 2%, two years 4%, three 
years 6%, and four years or over 8%. 

The total payment varies according to the profits of the 
year. 

The unique feature of the plan is that only one-half of 
the amount given to the employees is directly paid to them, 
the other half being deposited to their credit in savings banks 
designated by them. 

(1919) C. J. Whipple, general manager, September 8: 

''We have made no decided change in our profit sharing 

plan since 1916 except that last year we included employees 



PROFIT SHARING REPORT 125 

who had been with us six months, paying them a smaller per- 
centage than those in our employ for a year or more. From 
our force of around 1,100, approximately 800 shared in this 
distribution of profits. 

"We have always found it very difficult to say whether 
or not our profit sharing plan has had anything to do with 
lessening our labor problems. We feel confident, however, 
that it has enabled us to keep a number of our old employees, 
as over 40% of our force have been on our payroll for more 
than four years. We do not feel that it has had much effect 
one way or another on the newer people." 

Home Furniture Company, 
manufacturers of furniture. york, pa. 1914. 

(1916) A cash distribution is made at the end of the 
year, based upon the wages earned by the employees during 
that period. All employees in the service of the company at 
the end of the year participate, and about 100 are affected. 
It is reported that the total distribution in January, 1916, 
amounted to about $2,000. 

(1919) J. L. Gerber, president, writes, December 23, 
that the company's plan is about the same as in 1916. The 
chief difference is that the cash distribution is made at semi- 
annual intervals, and not annually as at first. The average 
number of employees is 132, all of whom participate in the 
plan, which is regarded as an unqualified success. The feel- 
ing of the employees is favorable, and there have been no 
labor troubles. 

Hotel Vendome. 
minneapolis, minn. 1912. 

(1916) All wages paid to employees during the year 
are charged to a so-called wages account. At the end of the 
year, 36% of the total wages account and 36% of the net 
profits of the business for the year are credited to the wages 
account. 

A share of the profits is paid to the employees at the same 
rate on wages as the percentage of excess credits to wages 
account over charges to wages account. If the credits to 



126 THE NATIONAL CIVIC FEDERATION 

wages account are less than the charges, no profits are shared. 
The ratio of wages and profits was fixed in 1912 "thus prom- 
ising a bonus in case the profits could be increased without 
increasing the wages." If the wages of any employee are 
automatically increased by reason of any state or national 
law, that employee's share in the profits is computed on the 
basis of his previous salary and the amount of the wage in- 
crease deducted from his share in the profits. 

(1919) A representative of the house writes: 
''The operation of the women's and minors' minimum 
wage law in Minnesota has disjointed our plan. We paid 
our profit sharing dividends out of extra profits over 1912 
(the basis of our 36% specified on the plan). The increase 
of wages and other costs has practically eliminated the extra 
profit over 36%." 

It is further stated that of the seventy employees of the 
company about one-half participate in the profit sharing 
plan. Their feeling toward it is rather indifferent. The 
tendency toward labor troubles has not been modified ap- 
preciably. 

Inland Steel Company, 
chicago, illinois. 

(1919) The company's employees' savings and profit 
sharing pension fund was put into effect April 1, 1919, and 
G. H. Jones, first vice-president, expects that at least one-half 
of the employees will participate. The company contributes 
to the fund annually a sum equal to 5% of its net earnings. 
An employee, in order to participate, deposits in the fund 5% 
of his salary up to $300. The fund is handled, intrusted and 
invested under the direction of a board of five trustees. The 
number of employees of the company runs between 5,000 
and 6,000. (Pamphlet.) 



profit sharing report 127 

International Harvester Company. 

(See Stock Ownership.) 

International Motor Company, 
allentown, pa. 1915. 

(1916) An announcement by the company was reported 
in August, that a "war bonus" aggregating 20% of the total 
monthly earnings would be paid to its employees on the first 
of each month. 

It was stated that the bonus was in recognition of excep- 
tional business created by the war, and that the object was to 
retain good employees and build up a strong and permanent 
organization. 

This distribution is typical of special and probably tem- 
porary bonuses paid by many large corporations engaged in 
fulfilling war contracts, on the theory of sharing with the em- 
ployees some of the extraordinary profits. 
• 

Jobbers Overall Company. 

overalls and coats. lynchburg, va. 

(1919) A. C. Barrow, president and treasurer, Novem- 
ber 12: 

''Under our profit sharing plan we do not distribute any 
money among our employees until the last of the year; there- 
fore it is too early to tell you what our results will be for this 
year. We have changed our plan somewhat, and during the 
past year gave our employees life insurance policies and 
weekly sick benefits, but still expect to distribute a part of 
our earnings among our employees on a payroll basis. For 
instance, the employee whose pay has been highest during 
the year will receive a larger percentage of the profits, owing 
to the fact that this employee has produced more work, and 
our profit on her production being greater she is therefore 
entitled to a higher rate." 

King Motor Car Company. 

detroit, mich. 

(1916) A certain sum of money is set aside at the close 
of each year to make a bonus payment to employees. This 



128 THE NATIONAL CIVIC FEDERATION 

sum has been approximately 7%% of the net earnings. Each 
employee receives about 10% of the amount of his yearly 
wages. 

Kohler Company, 
kohler, wis. 1916. 

(1916) Each employee will be given a maximum bonus 
of 10% of his total monthly wage or salary for a perfect 
attendance. 

(1919) Herbert Kohler, employment department, Sep- 
tember 12: 

"At present we maintain an average of 1,000 men in our 
organization. 

"Attendance bonus, in effect March 1, 1916: Each em- 
ployee working every regular designated working day was 
paid a special attendance bonus of 10% on his total monthly 
wage or salary on the 25th of the month following. This 
applied to all employed in the plant and general office, in- 
cluding departmental heads, but excluding executives. . . . 

"Broad modifications were put into effect February 1, 
1917. The bonus applied only to time actually worked on 
full attendance. It did not apply on compensation paid un- 
der the workmen's compensation law, by benefit association, 
for pensions, insurance or other special bonuses. 

"A 100% attendance was necessary to be assured of the 
bonus. Excuses, however, were accepted for cause. 

"This plan was continued until April 30, 1919, when it 
was withdrawn and the 10% provided by it was applied to 
the wage scale. This bonus had stimulated a somewhat bet- 
ter attendance. The steady men received it regularly, but it 
did not reach the men not regular in attendance. 

"War service bonus, effective July 1, 1919: A special 
bonus was paid on July 1, 1919, on the wages earned in 1918, 
to all employees who had been continuously employed up to 
July 1, 1919. This bonus amounted to something over 10% 
of the 1918 wages. A special bonus, paid to those on the 
honor roll, amounted to over 10% of the wages they would 
have earned in 1918. 

"Our conclusions on special distributions are that they 
are not a panacea for all ills. They are effective, however, 



PROFIT SHARING REPORT 129 

when given for a specific purpose, and when they actually 
are in excess of the regular wage. We have found that our 
turnover is a comparatively small percentage of the total 
number of men employed. We have other plans of special 
distribution in contemplation, which we are not prepared to 
make public at this time." 

The Korsmeyer Company, 
electrical supplies. lincoln, neb. 

(1919) L. W. Korsmeyer, vice-president, December 11: 
"Our plan (introduced June, 1917), includes all em- 
ployees except officials and salesmen on commission basis. 
We do not consider our plan a success for the reason that we 
can see that it has no effect on our employees, although we 
will admit that we ourselves are largely to blame in this mat- 
ter for the reason that we have not made all our employees 
as thoroughly acquainted with the plan as we should, and we 
will see that this is remedied at once, but even aside from 
this, we very much doubt if it will ever have any effect. The 
first year that we put it into operation we had all of our em- 
ployees. Our plan contemplated the employee taking his 
bonus in stock of the company, but he was given the choice 
of taking cash instead at a discount of 20%. We found that 
every employee took his bonus in cash. For that reason alone 
we considered the plan a failure. It did not bind the com- 
pany and the employee together, and the bonus received was 
considered merely as a part of the wage." 

Larkin Company, 
soapmakers, chemists, etc. buffalo, n. y. 

(1916) The clerks in the sales department receive a 
bonus each month equal to one-tenth of their aggregate 
monthly pay roll. The amount of bonus to each clerk de- 
pends upon salary and considerations of individual merit, 
such as helpfulness, loyalty, application, deportment and at- 
tendance. Questions of merit are decided by bonus com- 
mittees composed of five members, elected by the clerks in 
each section. These committees award "bonus points," up 
to ten, at the end of each month. 



130 THE NATIONAL CIVIC FEDERATION 

Another form of extra distribution by this company is 
the payment of a rate of interest higher than normal on a 
savings fund, in which there are deposits of $200,000 by 
1,200 employees. The rate paid is 5%. There are about 
200 employed in the sales department, who participate in 
the plan. 

(1919) W. R. Heath, vice-president, December 30, 
sends the following, as published July 31: 

The company will be re-capitalized at $30,000,000 and 
stock will be offered to all employees whose service and 
positions make them eligible. 

(a) The present stockholders of the Larkin Company 
may hold both preferred stocks and common stock. 

(b) Any employee of the company, or of Larkin Com- 
pany of Illinois, or of Larkin Company of Pennsylvania, 
not a stockholder, who on January 1, 1919, had completed 
three full years of employment was then at least twenty-one 
years of age, and a citizen of the United States, shall be 
known as a charter employee stockholder, and shall re- 
ceive common stock as provided hereinafter, and 

(c) Any charter employee stockholder who has been 
designated as eligible and any other employee of like 
qualifications who has been designated as eligible may hold 
common stock received as distributed profits or by pur- 
chase. 

It is proposed to organize a corporation under the laws 
of the state of New York with $20,000,000 of first preferred 
stock and $30,000,000 of second preferred and common 
stock. The first preferred stock shall have a par value of 
$100 per share, and shall pay a dividend of 3% in 1919, of 
5% in 1920, of 6% in 1921, and of 7% in 1922, and each 
year thereafter. This stock shall be preferred as to assets, 
and cumulative as to dividends, but shall not further par- 
ticipate in the profits of the company. 

Lawrenceburg Roller Mills Company, 
lawrenceburg, ind. 

(1919) S. H. Lewis, vice-president and manager, No- 
vember 12: 

4 We instituted among our employees three years ago a 
system of bonuses which consists of our giving to each em- 
ployee who is on our payroll December 31 each year a sum 
equal to 10% on the money earned during the year. In other 
words, we add 10% to the salary and wages paid during the 



PROFIT SHARING REPORT 131 

year to each employee, giving it in the form of a check for 
the entire amount. We believe that this is thoroughly appre- 
ciated by our employees, and we are pleased to say that we 
have never had any trouble in our plant or with any of our 
employees. The average number of our employees runs 
about 110, and they all participate in this bonus plan, but 
none of the officers do. While we have made no special in- 
quiry as to whether this plan is acceptable or not, we believe 
it is. 

"In addition we carry insurance on the life of all our 
employees for $1,000 each, we paying the premium, and we 
know that this is also very much appreciated. We regard 
both of these plans as being an unqualified success. We be- 
lieve, however, that any plan of this sort would fail if it were 
not accompanied by a sincere desire on the part of ourselves 
to make our employees feel comfortable and, as far as we 
can, to take a personal interest in their welfare. We realize, 
of course, that that plan could not work out very well where 
a much larger number of employees was considered, but even 
in the largest kind of a plant the heads of departments should 
be in a position to keep pretty closely in touch with the em- 
ployees in their charge. Men or women who are selected for 
those positions should be chosen with the idea that they know 
something about the human touch. 

"The writer has never had any difficulty in feeling close 
to our own employees for the reason that he has been one of 
them and therefore knows pretty well the attitude of em- 
ployees toward those whom they are working with, and the 
idea of 'working with' should be exemplified rather than 
'working for.' 

"Business to-day is becoming largely co-operative and 
there is a thorough understanding, or should be, among man- 
ufacturers and those employed for labor. Unless there is 
co-operation and a good feeling existing, the business itself 
cannot be as successful as it should. At least, that is our 
view of it." 



132 the national civic federation 

Lilly Carriage Company. 

manufacturers of carriages, harness and automobiles. 

memphis, tenn. 

(1916) A certain portion of the net profits over 6% is 
divided among the men who have been in the company's em- 
ploy for one year. The employees are skilled mechanics, 
and the amount is divided in proportion to their wages. The 
plan applies to the rank and file and department heads, but 
not to the office force. 

(1919) A representative of the company reports, De- 
cember 27: 

"Our old force of hands, who had been with us a great 
many years, was sadly depleted by the war, some of them 
going to the automobile factories, some to shipbuilding 
plants, and others were connected with war manufacturers 
of different kinds. We have never as yet been able to build 
up our organization back to its old time standard, and it is 
very difficult to accomplish this, as we only employ the high- 
est grade of skilled workmen. We are also particular, too, 
as to their character and general habits. We can say in a 
general way that we are strong believers in the profit sharing 
plan, but we believe that success depends entirely on just how 
it is put up to the beneficiaries." 

Louisville Varnish Company, 
louisville, ky. 

(1916) Every employee who has been with the com- 
pany a year receives a bonus of 10% on his salary. The 
president of the company states that they are very careful 
that the salaries paid by them are as much as or more than 
those being paid by others for the same kind of service. In 
further explanation he says that the plan "of course is really 
not on a profit sharing basis, but is a bonus or a present, and 
as philanthropy or benevolence does not belong in business 
we worked up a plan looking to the distribution of a certain 
percentage of the gross profits of the company." 

(1919) P. H. Callahan, president, September 12: 
4 We have made several changes [in the plan], which is 
almost identical with the plan outlined by Mr. George W. 
Perkins. 



PROFIT SHARING REPORT 1*33 

"With many years' experience in profit sharing we be- 
come stronger advocates of the principle, but it requires a 
systematic effort to have the employees fully appreciate the 
benefits of same." 

In a recent address, Mr. Callahan said: 

"We distribute the annual profits among the employees 
as well as the owners, and we do that on a fifty-fifty basis. 
When the books are closed at the end of the year, every 
person who works for the company, from the president in 
the office to the wrapper boy in the factory, has been given 
a wage commensurate with the character of his work, with 
a becoming living as the minimum, which was paid each 
week or month during the year. Then, we pay a living 
wage to the actual capital invested, which is simply the 
market price of money or the usual rate of interest, and 
that gives us a starting point of equality between labor and 
capital. From here on we split half and half. The em- 
ployees and owners having each alike received a return 
necessary to support them in the part they play, we are 
ready to divide the remainder, which we do share and 
share alike, one-half going to the capital and the other half 
going to the labor that has been employed. The half that 
goes to capital is divided among the owners in proportion, 
of course, to the money they have put in. The half that 
goes to labor is divided among the employees in propor- 
tion to their respective wages during the year, so that one 
who gets $60 per week in wages receives twice as much of 
the profits at the end of the year as the one who gels $30 
in wages." 

Lowe Brothers Company, 
paint and varnish makers. dayton, ohio. 

(1916) Under the will of a former president of the 
company, the income from his interest in the business is 
divided among the employees. For the purpose of distribu- 
tion, the employees were divided by him into three classes: 
(1) Those receiving $1,000 or under; (2) those receiving 
from $1,000 to $2,500; and (3) those receiving $2,500 or 
more. The current dividends on this fund are divided into 
three parts, and each part is then divided among the number 
of employees in that class. The president of the company 
says: 

'T do not consider the plan an unqualified success, and 
therefore I am trying to work out a better one, but so far have 



134 THE NATIONAL CIVIC FEDERATION 

been able to conceive of no plan other than steady work, fair 
wage and reasonable conditions under which to work, that 
will stimulate the rank and file." 

(1919) D. A. Kohr, secretary and assistant general 
manager, October 9: 

'We have no profit sharing plan. The former president 
of our company, who died a number of years ago, left a pro- 
vision in his will that the dividends from his stock should be 
paid to the employees of the company for a period of ten 
years. This period has now elapsed, and we have no profit 
sharing plan of any kind in force. We have been investi- 
gating this subject and are considering the advisability of 
adopting a plan if we can find one that appears to be satis- 
factory. So far we have come to no definite conclusion in 
this matter." 

The Walter M. Lowney Company. 

MANUFACTURERS OF CHOCOLATES. BOSTON, MASS. 1903. 

(1916) Employees of all grades who have been in the 
company's service for one year and have done satisfactory 
work are given a bonus at the expiration of that period. The 
bonus is based on the weekly wage for the year and varies in 
different instances. Occasionally the bonus is withheld as a 
penalty for carelessness. 

The system is the outgrowth of a distribution of Christ- 
mas bonuses to certain employees, which rapidly grew to in- 
clude the entire force of more than 1,000 employees. The 
company reports that the result has been satisfactory but that 
the establishment of a definite minimum wage by the State of 
Massachusetts might lead to abandonment of the bonus plan 
and the combining of wages and profit sharing in a single 
item of wages. 

(1919) The vice-president and general manager writes, 
September 5: 

"Trade conditions here in our line made it seem advis- 
able to change the profit sharing plan which we had in effect 
from 1902 until about 1916. This was due to the fact that 
there is a definite high point of production and employment 
in the candy business for which special inducements were 
made to employees which had the effect of undermining and 



PROFIT SHARING REPORT 135 

practically putting out of business the more conservative 
plans which covered the full year period. 

"Manufacturers in our line, instead of working on a 
profit sharing basis are now working largely on a so-called 
full attendance dividend, which means that for the last sev- 
eral months of the year bonus payments of say 5% for full 
weekly attendance, additional 5% for full four weeks' period 
attendance and in some cases a third 5% for full attendance 
for the full period of the several months, are being paid in 
addition to the regular wages. 

Lyon, Gary & Co. 

LUMBER MANUFACTURING. CHICAGO. 

(1919) Calvin Fentress, treasurer, November 19: 

"Lyon, Gary & Co. are interested through their directors 
and stockholders in a large number of lumber manufacturing 
concerns, and while we are not attempting to speak for any 
one of them in particular we can say that our general experi- 
ence has been that profit sharing plans, as generally under- 
stood, have not given the results for which they are intended. 

"As we understand it, the purpose of profit sharing is 
first, of course, to do the fair and just thing by employees, 
but more particularly to give them a deep personal interest 
in their work and to stimulate them to their best efforts. In 
the writer's opinion, a general profit sharing plan does not 
accomplish these purposes. Few employees of a large cor- 
poration understand the thousand and one accounting items 
that go to make up the final profits or losses of a manufac- 
turing operation. Even if they did understand the accounts, 
with which they have nothing to do and which are absolutely 
beyond their control, they would not be stimulated by the 
knowledge gained. 

"Our thought therefore has been to study this problem 
by breaking it up into its smallest factors and attempting to 
show the individuals in small comprehensive groups the re- 
sults they were producing and then sharing with them the 
benefits accruing to the operation through improved effort 
of that particular department with which they have to do. 
This in the last analysis might be said to approximate the 
piece system, though in the" writer's opinion it is quite a 



136 THE NATIONAL CIVIC FEDERATION 

different proposition. In a word, our theory has been to try 
to study out the organizations with which we are connected, 
devising plans that would stimulate the whole organization — 
the officers in the general results from the entire property, 
the department heads in the results of their respective depart- 
ments, the foreman in the results produced from his little 
group and so on down through the sub-foremen to the individ- 
ual men. It requires a great deal of accounting and much 
close attention to cover changing conditions. 

"We think that stock ownership by the men higher up in 
the organization is excellent, but for the average employee 
we feel that the plan accomplishes little. The amount of 
stock he is able to own is so small as not to be of great benefit." 

James McCreery & Co. 

DEPARTMENT STORE. NEW YORK. 

(1919) As reported by Louis Stewart, November 14, 
the company in September instituted a plan "to increase fur- 
ther the co-operation, productive ability and earning power 
of its employees." It proposed to divide one-half of the 
savings in operation which the managers were positive would 
result from the plan among the workers of the establishment. 
By savings in operation was meant reduction in the percent- 
age of cost of operation, resulting mostly from an increase 
of sales, which on the part of the workers is directly accom- 
plished by unceasing diligence during store hours, courtesy, 
carefulness in saving, accuracy and the avoidance of waste. 
The workers at present under the plan number 1,100. The 
organization comprises a body of representatives whose reso- 
lutions are submitted to a cabinet composed of the executive 
officers and managers of the business. 

The plan includes only the workers, and the attitude 
toward it is reported as enthusiastic, with no labor troubles. 
The buyers of the firm work on a percentage of sales basis, 
and the other heads of departments receive bonuses inde- 
pendent of the profit sharing plan. 



profit sharing report 137 

Mabley & Carew Company, 
department store. cincinnati, ohio. 

(1919) A profit sharing plan, known as the bonus-com- 
mission plan, has been presented to the employees of this 
company and indorsed by them. This plan is to guarantee 
an employee earnings equal to a certain percentage on sales, 
to vary according to the department. If the commission 
should fall below the present pay of an employee there would 
be no deduction, and if it should go beyond that sum he 
would receive the added amount represented by the difference 
between his present salary and the total percentage to which 
he would be entitled. This bonus will be retroactive as of 
January 1, 1919, and will be paid quarterly. About 300 
employees (50%) will share in the distribution for the first 
six months of 1919. 

Majestic Manufacturing Company, 
iron ranges, water heaters, etc. st. louis, mo. 

(1916) All employees who have been with the company 
for two years or more receive a premium for continuous and 
loyal service, on the following basis: for two years' service, 
$10; four years, $20; six years, $30; and so on to a maxi- 
mum of $100 for 12 years or over. The premium is paid in 
cash shortly before Christmas. 

The company established the eight-hour day 20 years ago, 
and claims to pay the highest wages for the class of work 
performed. In December, 1914, 223 employees participated, 
the aggregate amount then paid approximating $8,000. The 
average number of employees is 485. 

(1919) Frank R. Henry, vice-president, October 13: 

"We never had any profit sharing plan in force in this 
company. We did use a little bonus plan a few years ago, 
but our experience with it was not satisfactory. Men nowa- 
days want wages, and don't want to be involved in any profit 
sharing scheme. In other words, they are going to get theirs 
whether the employer gets anything or not. That seems to be 
the general feeling at this time. It may be possible that a 
profit sharing plan may be worked out that would bring about 
a more harmonious industrial situation, but if so human 



138 THE NATIONAL CIVIC FEDERATION 

nature will have to be changed. A long campaign of educa- 
tion will be needed to accomplish anything of a permanent 
nature." 

A Manufacturing Company. 

NEW YORK. 
(Name of company withheld because plan new.) 

(1916) The subject is a puzzling one and according to 
my experience employers are much more concerned than em- 
ployees in the matter, and it is very difficult to see whether 
they get value for what they spend in that direction or not. 

A manufacturing company, of which I am a director, is 
now trying a new line, that is, new to us and differing slightly 
from anything else in practice that we have seen. 

It has been our custom for some years to give bonuses at 
New Year to foremen and others, based in a rough way on 
the work of their departments, and the total amount of the 
bonuses being a percentage of the profits of the concern. This 
year we have changed that, and instead of cash gave them 
passbooks on a "co-operative savings fund." They can with- 
draw these deposits if they see fit, or can add to them from 
their own funds precisely as in a savings bank. So far there 
have been more new deposits than withdrawals. The com- 
pany guarantees 5% on these deposits and if it pays dividends 
in excess of 5% will make the rate on the deposits equal to its 
dividend rate. At present this rate is 7%. How it will work 
we are much interested to know, but the hope is that each of 
the men will now feel a sense of ownership in the plant. This 
plan may not be ideal but it seemed to us a good way of 
working out the cash bonus scheme, which no doubt had done 
us no harm, but as far as we could see did us no particular 
good. The men participating in the dividend fund amount 
to 8% of the total employees (15% of the men) and of 
course are the best paid and most- intelligent. 

( 1 ) Our plan calls for a cash distribution with option of 
investment parallel to stock but not in stock, the amount in 
either case being based upon company's profits and record of 
man's work during the year. See memorandum below. 

(2) Cash distribution without option was begun 1904, 
option in 1916. 



PROFIT SHARING REPORT 139 

(3) Includes heads of departments, assistants to heads, 

and office men. 

(4) Four hundred employees, of whom about 200 are 

women; 30 participants, all men. 

(5) It has created some good feeling, but good effect 
probably small and difficult to appraise. 

(6) Modified 1916 as shown below. 

Memorandum. — For 12 years past it has been our custom 
to give to each foreman and to a few others in important posi- 
tions New Year checks. The total distribution was a fixed 
percentage of the profits of the company, while the shares 
were figured with reference to the amount of work and sup- 
posed efficiency of the particular department. With each 
check was sent a brief letter from the treasurer explaining 
the method of computation but not stating what percentage 
of profits was distributed. The business has been a growing 
one, hence both the number of participants and the amounts 
of the individual checks have had an upward tendency. 

Some years ago, in recognition of a notable service, we 
gave one man in addition to his annual check a certificate for 
a few shares of stock, and found that he attached much more 
importance to this than to an equivalent amount of money. 
This incident confirmed the idea, already entertained, that it 
would be helpful if we could give the men something not to 
be spent but to be kept. We did not wish to give them stock, 
because there was no open market for it, and there was some 
risk that we did not wish them to take, and because our shares 
being hundred dollar shares and most of the checks being of 
amounts under $100 each, the delivery of stock would be 
complicated and difficult for some to understand. 

Accordingly we established in January, 1916, what we 
call our co-operative savings fund, on the following plan: 

I. A bonus list is established, including all foremen who 
received bonuses in 1915 and also certain office employees 
and others, the length and value of whose service entitle them 
to recognition. The executive committee will make up the 
list at an early date, and may add and withdraw names at 
any time. 

All on the new list on February 1, 1916, will receive 
bonuses out of the company's profits of 1915. 



140 THE NATIONAL CIVIC FEDERATION 

II. All bonuses will hereafter be paid in passbook credits, 
but with the right to withdraw all or any part forthwith as 
below provided. 

III. Every one on the list and every person whom the 
company may admit to the fund will receive a passbook in 
which his bonuses and any other moneys he may deposit 
with the fund, and as well all dividends on credits, will be 
entered. 

IV. All credits, whether from bonuses or other sources, 
may be withdrawn at any time. 

V. The company will guarantee all passbook credits, and 
also the payment thereon of an annual dividend at the highest 
rate paid on any class of its stock. At present it pays 7% 
on preferred stock and 6% on common. Should dividends 
be suspended or reduced it will at any rate pay 5% on pass- 
book credits. 

VI. The fund will be invested in the company's mortgage 
bonds, other first mortgages on the company's property, or its 
preferred stock. The earnings will be applied on the divi- 
dends, and the company will make up the difference. 

VII. Any one ceasing to be employed by the company 
ceases to be a member of the fund and must withdraw his 
account unless the company consents, as in case of disability, 
to continuance. 

The company reserves the right to determine the member- 
ship of the fund, to limit the amount of deposits, and also to 
discontinue the plan altogether at the end of any year, in 
which case it shall forthwith cash all deposits. 

VIII. The fund shall be administered by a committee of 
five depositors, all of whom shall be named by the company 
for the first year. After the first year the depositors shall 
elect three members of the committee and the company shall 
name the remaining two. 

The committee shall audit accounts, fix rules and times 
for receiving deposits and paying withdrawals, select invest- 
ments, and make other reasonable regulations. 

This plan was put in operation by the delivery of the pass- 
book to each depositor by the treasurer of the company, with 
oral explanation. As a rule only one depositor was called 
to the treasurer's office at a time. It should be added that 
most of the men have been for considerable periods with the 



PROFIT SHARING REPORT 141 

company. In explaining the plan, stress was laid on the de- 
sire of the company that the men should have and feel an 
actual ownership in the concern, but without the risks of 
stockholding. So far as could be judged it was extremely 
well received. One man, for example, said the feeling of 
being one of the company was worth more to him than any 
dividend. Two have drawn out their bonuses in cash, but 
this is more than offset by new deposits made. 

The company members of the committee, being the vice- 
president and the treasurer, have qualified by becoming de- 
positors of their own funds, but only in nominal amounts. 

(1919) Mr. Lloyd wrote, November 19: 
'The plan is still in force. Certain employees draw out 
the amounts credited to them at once. Others treat the ac- 
count as they would a savings bank account and draw only 
when in need of funds. Others again religiously keep the 
whole amount in the fund, and continue to accumulate. The 
net result is that the fund at this date is about equivalent to 
the total payments made into it by the company. In other 
words, deposits of employees' own moneys about equal the 
drafts made. Average number of employees in the particu- 
lar factory about 400, of whom about 10% participate. 

"No change or modification has yet been made. Divi- 
dends are now 8% per year, corresponding to increase in 
rate on our stock. We plan to open the savings fund (not 
the bonus distribution) to all employees of long standing. 

'The feeling toward the plan is friendly. We have never 
had serious labor trouble in any of our plants. This plan 
extends only to foremen, office men, and a few other em- 
ployees of long standing, hence it does not reach those among 
whom labor troubles would be most likely to arise. 

"It is my thought that piece-workers should be paid by 
fair piece rates with direct bonuses for special production. 
If these rates and bonuses are just, the piece-worker receives 
his due, and is hardly more a factor in making the profits 
than is the man who sells us our materials. 

"But I am not able to devise a satisfactory method of 
piece pay or production bonus for foremen, inspectors, clerks, 
etc., whose work nevertheless, especially when involving dis- 
cretion, ingenuity, or executive ability, may be a very mate- 



142 THE NATIONAL CIVIC FEDERATION 

rial factor in the profits of the business. We think that a 
share in the profits is due to these people and by our annual 
distribution of a fixed percentage of profits (before, not 
after, dividends on capital) we give it to them. The share 
in this bonus fund which each man gets depends on our 
opinion of the value of his work for the year. Our discre- 
tion is only as to the division of the fund between the par- 
ticipants. The total to be distributed is fixed at the same 
percentage each year. 

"The savings fund is supplemental and is designed to 
give all participants in the bonus, and all old employees as 
well, a chance to participate in the prosperity of the company 
on the same basis as stockholders. 

"In connection with the recent purchase of an additional 
factory above mentioned, we made an increased issue of pre- 
ferred stock and at the suggestion of one of our officers opened 
the subscription books to our employees as well as to our 
existing stockholders. There was no public sale of the stock, 
all the shares put out going either to present stockholders, 
present employees, or persons recommended by them. There 
was no solicitation, simply a notice on the bulletin board. 
The amount taken by the employees and their friends was 
surprisingly large, and some subscribed for this preferred 
stock moneys which would have been safer and would have 
paid a large return (8%) if invested in the savings fund. 
We are therefore wondering whether the savings fund plan 
is fully understood even by our more intelligent and experi- 
enced employees, and whether a direct stock ownership plan 
might not be a desirable addition or substitute. 

"It may be mentioned that we have a very live foremen's 
club which meets fortnightly, and of which the company's 
officers are members. We have also a co-operative store, 
which buys coal, groceries, etc., for the employees and which 
they themselves operate. We maintain group insurance on 
the lives of all in the company (after a certain length of 
service) from the president down. We assist employees in 
the purchase of homes and in other ways. 

"I do not class any of these things as profit sharing. I 
merely recount them to indicate the general relation between 
our company and those who work for it, which may be help- 
ful in understanding our savings fund plan." 



profit sharing report 143 

Mechanicville Knitting Company. 
men's wool and cotton underwear. mechanicville, n. y. 

1910. 

(1916) Every employee who has been in the service of 
the company for one year receives the equivalent of a week's 
salary at Christmas. The total distribution amounts to about 
$1,000. There are 100 employees. 

The company reports that the plan has been successful 
and that there has never been a strike of any nature among 
the employees. 

(1919) The company states that the plan as outlined 
in 1916 is still in force and has proved very satisfactory. 
It has about 110 employees, and "all share in the benefits 
of the profits at the end of each year." 

Metropolitan Life Insurance Company. 

new york city. 

(1916) The Metropolitan Life Insurance Company 
established in 1900 a system of company contributions to a 
savings fund in which its employees may be voluntary deposi- 
tors. Agents, superintendents, assistants, clerks in the home 
office or any employee not in receipt of the higher grades of 
salary may pay into the fund an amount annually not to 
exceed a certain per cent of one's salary. The fund is admin- 
istered by a board of trustees made up of seven officers and 
other members of the staff. The company contributes an 
amount equal to 50% of the amount paid in by the members. 
A depositor may withdraw, from the fund at any time he so 
desires and for any cause. If he voluntarily retires, he can 
take out of the fund all the money he has put in plus all 
interest accumulations, and in the year of withdrawal 3% 
from the last interest day to the date of withdrawal. If he 
stays in the fund until permanently disabled or he dies, his 
contributions with interest and the company's contributions 
of 50% and interest are paid in one sum to his heirs in case 
of death, or to himself in case of invalidity. 

The growth of the fund in membership and money has 
been steady. For example, on December 31, 1904, the mem- 
bership was 5,067 and the accumulations $333,511.98. The 



144 THE NATIONAL CIVIC FEDERATION 

voluntary withdrawals during the year had aggregated $29,- 
886.27 and the company's subscription $34,031.64, while the 
forfeitures were $9,103.60. The interest paid was 5.25% 
and the additions to the three classes of membership 2.58, 
4.50 and 3.47%, making in case of the three classifications 
the average rate of earnings 7.83, 9.75 and 8.72%. On 
December 31, 1915, the membership had grown to 8,842. 
The voluntary withdrawals during the year aggregated $199,- 
266.25. The amount of the company's subscription was 
$138,587.28, and the forfeitures $86,290.58. The total 
amount of the fund was $2,971,038.24. The earnings of 
the contributors to the fund had been: For 2,818 Class A 
members (clerical force), interest 5%, forfeiture 1.43, mak- 
ing the average rate 6.43%; for 4,396 Class B members 
(agents), interest 5, forfeiture 4,68, total 9.68%; and for 
1,628 Class B members (superintendents, assistants, etc.), 
interest 5, forfeiture 4.68, total 9.68%. 

The earnings indicated by these percentages are in addi- 
tion to the 50% subscribed by the company. For years the 
total amount received by the depositors had been over 10% 
of their deposits. Illustrations of the growth of individual 
sums in the fund are seen in the fact that one member whose 
deposits amounted to $1,803 had to his credit in the fund 
$6,000. A superintendent who had deposited $950 had re- 
ceived additions of $1,578. An assistant who had deposited 
$1,193 had to his credit $4,050. An agent who had deposited 
$1,160 had to his credit $3,408. 

(1919) Lee K. Frankel, third vice-president of the com- 
pany, September 16: 

'The plan outlined on pages 112 and 113 of your last 
report is still in force. There has been no important change 
or modification in the rules since 1916. As far as we can 
judge, employees appreciate the fund and avail them- 
selves of the company's offer. We have never traced the 
relationship between the fund and our labor problems." 

Company booklets give the following data: 

In the staff savings fund, on December 31, 1918, there 
were 7,901 depositors of all classes, with credits to their 
accounts totaling $4,122,367.21, of which the company's 
subscriptions with interest amounted to $1,729,729.93. The 
average rate of interest earned for the period between 1900 
and 1908 was 5.16%. 



PROFIT SHARING REPORT 145 

The company also maintains a vacation savings fund, 
the number of depositors on January 1, 1918, being 1,762; 
deposits, 1918, $23,208.50. 

In August, 1914, the company offered to employees an 
insurance plan under which provision could be made 
against sickness and accident. The company pays one-half 
of the premiums. On December 31, 1918, 14,413 em- 
ployees had availed themselves of this offer. Of these, 
3,720 were home office employees, and 10,693 employees 
in the field. During 1918, a total of 21,952 claims, 
amounting to $263,809.70, were paid. Of these^ 7,961 were 
on home office employees and 13,991 on those in the field. 
The policy provides for the payment of two-thirds salary 
during the first twenty-six weeks of illness, beginning with 
the eighth day of sickness. From the beginning of the 
twenty-seventh week of sickness to the expiration of the 
fifth year of sickness, one-half of the original benefit is 
paid. After this time until the employee reaches age 65, 
one-quarter of the original benefit is paid. 

The company has taken out group insurance on its own 
employees. During the year 1918, 49 claims were paid on 
the lives of members of the field force, with insurance ag- 
gregating $60,090. During the same period 49 claims were 
paid on the lives of home office employees for insurance 
aggregating $45,331. 

The company has continued its practice of providing 
for aged and disabled employees. During 1918 it author- 
ized the payment of allowances to 481 field employees to 
the amount of $252,622.51, ancf to 49 home office em- 
ployees, to the amount of $23,228.59. In addition special 
allowances to meet unusual contingencies of $19,469.98 
were made to 798 employees. 

The company also maintains numerous welfare and edu- 
cational features. It issues booklets describing its various 
welfare plans. 

Milwaukee Gas Light Company, 
milwaukee, wis. 

(1916) Every six months the employees are paid a 
share in the profits, at a percentage upon wages earned during 
the preceding six months, somewhat in excess of that paid 
on the capital stock of the company. Employees to partici- 
pate must have been with the company one year, and must 
have worked five months out of each six months' period, 
unless absent on account of sickness or for other special rea- 
sons. Officers of the company are not included. 



146 THE NATIONAL CIVIC FEDERATION 

The company reports that it does not consider the plan an 
unqualified success. It has promoted regularity of employ- 
ment, but the gift of additional money twice a year has had 
bad effects on the habits of certain of the men. The regular 
employees in time consider the extra money as a part of their 
wages and not as a bonus for good behavior and steady work. 
The company also points out that one of the objections to the 
system is that all share equally; "the man who barely escapes 
discharge is treated just as well as the best and most efficient 
in the organization. Of course, this is an inherent defect in 
nearly all of the profit sharing plans and one which is difficult 
to eliminate successfully." 

(1919) R. B. Brown, general manager, September 5: 
"Our plan of distributing bonuses to our employees at the 
same time that we pay dividends to our stockholders is still 
in effect, and, being based somewhat upon length of service, 
it covers about 80% of our present employees." 

Minneapolis Bedding Company. 

manufacturers of metal beds and bedding, 
minneapolis, minn. 1915. 

(1916) After paying stockholders 7% on the book 
value of the company's stock, creating a sinking fund equal 
to 5% of the outstanding preferred stock, writing off an 
amount not to exceed 5% of the book value of buildings and 
machinery, for wear and tear, the remaining profits of the 
company are divided between the stockholders and the em- 
ployees. An employee earning $1,000 a year shares equally 
with the stockholder having stock of a book value of $1,000. 
Employees must have served the company nine months before 
being eligible. An accountant is employed by the employees 
to ascertain the profits for the year. 

A general committee to represent the employees is elected, 
with three members from each of the eight departments, and 
the company's announcement states that: "No foreman is 
eligible to a place on this committee, but the foremen will be 
invited in by the management at all conferences." It is also 
provided that the share of profits that would accrue to tran- 
sient labor shall be used for shop betterment, "and if found 
necessary both the employees and the stockholders will be 



PROFIT SHARING REPORT 147 

expected to contribute their share for additional shop better- 
ment from time to time. But no more than 10% of said 
profits shall be employed in additional shop betterment in 
any one year." 

The corporation has about 200 employees and a paid up 
capital of $425,000. Payroll and salaries amount to 
$150,000. 

(1919) Charles M. Way, president, November 20: 

,4 We are continuing our profit sharing plan. We feel 
that the results have been very beneficial during the past 
strenuous years, as our labor turnover has been exceedingly 
small. We have about 200 in our employ, and all participate 
in the profit sharing; all at least that have been in our employ 
nine months previous to a distributing period. The em- 
ployees seem to feel favorably toward the plan. Owing to 
our inability to get steel last year there were no profits to 
divide, but the help took this without a murmur, and have 
been as enthusiastic and loyal this year as at any time past. 

'We believe our profit sharing plan is a success. The 
main objection is that there are not always profits to divide. 
One of the chief advantages of it, however, is the monthly 
meeting we have where the representatives of all departments 
gather with a view to increasing profits. At the same time 
any trouble can be talked over in a friendly way. We deem 
it a great advantage to have committees appointed from the 
different groups, not to kick but with a view to increasing 
profits. The spirit of approach between the man and the 
company has been worth a great deal to both sides." 

In the company's profit sharing agreement is this pro- 
vision: 

"It is understood that the employees are to have the 
sole naming and employing of a chartered accountant to 
ascertain the actual profits from year to year. The expense 
of said accountant to be paid (from profits) before a divi- 
sion is made. In case that for any reason there are no 
profits to divide the report of the above mentioned ac- 
countant shall be to the effect that there will be no profits 
this vear for division." 



148 the national civic federation 

National Lead Company. 

NEW YORK. 

(1920) Edward J. Cornish, president, January 22: 

'We have no regular scheme of profit sharing adopted 
as a universal policy. 

'We have in our service some who receive a percentage 
of the profits of their department, or companies, as their com- 
pensation. This is limited in number, but has proved to be 
very profitable because, as I believe, of the unusual ability 
of the man. The salaries of all salesmen are adjusted from 
time to time. For the purpose of determining their salaries 
the profits made by them are kept and tabulated and is used 
when salaries are increased, but so far as I know has never 
been useful in bringing about a decrease of salaries with 
decreasing profits. 

'The company encourages all of its officers and employees 
to become owners of its common stock and to that end has 
permitted officers and employees to buy stock at market price 
and obtain the money with which to pay for the same from 
the National Lead Company to be repaid in monthly pay- 
ments withheld from their salaries. In these cases I, as presi- 
dent of the company, have purchased the stock which was 
offered to our people at actual cost. We will doubtless con- 
tinue this practice in the future in the belief that it encourages 
thrift and tends to develop interest in the company. To date 
it has been accepted with enthusiasm, but to date the market 
price for the stock has always been more than the price at 
which they acquired it. We hope that by the interest thus 
stimulated the value of the stock will never become less, but 
should such an event happen that would prove the real test 
of the scheme." 

National Paper Company, 
atlanta, ga. 

(1919) S. Wise, manager plant, October 16: 

'We have in effect a bonus system. The production of 

each machine is standardized and for anything above this 

standard produced daily we give to the man running such 

machine a stated amount per unit of production. Some of 



PROFIT SHARING REPORT 149 

our men have been earning $4 to $5 per week extra. One 
man for his part has doubled his pay for over two months; 
some, however, have not been earning anything extra at all. 
Upon investigation it was disclosed that this was not due to 
the bonus system, but only to the lack of interest displayed 
by the operator. 

"What we are after is some comprehensive profit sharing 
plan to place all our workers on an even basis. We really 
believe that the trend of the times is such as to make it abso- 
lutely necessary within the next few years at the outside for 
all commercial concerns to have some sort of profit sharing 
plan, and we feel disposed to give a thorough trial to some 
such system." 

New England Confectionery Company. 

boston, mass. 

(1919) Frederick Hayward, November 12: 
"The profit sharing plan was adopted by this company 
in 1906 and is still in force. At the present time our average 
number of employees is 1,200, and of these about 80% will 
probably participate in the profit sharing for this year. In 
general it is felt that our employees appreciate the plan. 
This company has always been free from labor troubles, and 
it is undoubtedly true that the profit sharing plan has helped 
to maintain the cordial relations that have always existed. 
The plan is not limited and it includes all those who are on 
our payroll September 1 who comply with a few simple regu- 
lations and who are still on the payroll when the profit shar- 
ing dividend is payable, about February 1. The only excep- 
tions are officers and directors of the company. The plan is 
not regarded as an unqualified success. Profit sharing has 
come to be looked upon by some as a bonus on wages which 
is certain to come along regularly every year. It is the feel- 
ing of our directors that our present plan can be, and ought 
to be, changed and improved." 

Newport Daily News. 

NEWPORT, r. i. 1901. 

(1916) A cash distribution is made annually to em- 
ployees who have been with the newspaper a full year, in the 



150 THE NATIONAL CIVIC FEDERATION 

proportion which the individual employee's wages bear to 
the entire payroll. About 45 of the 57 employees are eligible. 
The president of the company says: "The plan was estab- 
lished voluntarily upon what I believe is correct principle. 
I am not sure that it has increased interest and so it may or 
mav not be a commercial success." 

(1919) Edward A. Sherman, president and treasurer, 
September 5: 

"Our profit sharing dividend is still in force and the re- 
sults are very satisfactory. The average number of em- 
ployees participating in it is about 30. No change or modi- 
fication has been made in our plan and those for whose benefit 
it is intended like it. It has undoubtedly been the means of 
eliminating any tendency toward labor troubles. The dis- 
tribution is based on the percentage of profits and it includes 
all the force except the majority owner of the paper. We 
regard it as an unqualified success." 

New Jersey Zinc Company. 

NEW YORK. 

(1916) The company announced in January that a cer- 
tain sum had been set aside out of the net earnings for pay- 
ment to the employees of a bonus of 10% on wages earned 
during 1915. Only those who have been with the company 
at least one year are eligible and the payment is said to be 
purely a gratuity, not affecting wages or salaries. The bonus 
will be paid in four instalments during 1916 to those who 
are still in the company's employ on the first pay day after 
January 1, May 1, August 1 and December 1, respectively. 
(1919) A. P. Cobb, vice-president, January 7: 
,4 T'he plan "is unchanged except that the percentage on 
wages is governed from year to year by the amount which the 



company earns." 



Northwestern National Insurance Company. 

milwaukee, wis. 

(1919) W. A. Reed, vice-president, November 10: 
"We are, and have been for nearly two years, compen- 
sating our employees upon a salary basis plus a percentage 



PROFIT SHARING REPORT 151 

bonus figured on that base. This we believe to be the practice 
nowadays of most of the representative companies engaged 
in the insurance business." 

Ohmer Fare Register Company, 
dayton, ohio. 

(1919) John F. Ohmer, president, November 12: 

"In our opinion, there can be no general or fixed plan 
for making ideal conditions between employer and employee. 
Plans which are devised in plants operated on a piece basis 
would not apply to specialty plants; i.e., where the product 
is variable and continuously changing. 

"During the period of the war we adopted a loyalty bonus 
plan whereby each employee received a bonus of from 8 to 
15% of his wages, the percentage varying in accordance 
with the time served by the employee. Since the armistice 
was signed we have continued this bonus. 

"Our plant is open to all comers who can qualify, irre- 
spective of religion, politics, associations or previous condi- 
tion of servitude. We have no fixed scale of wages, but pay 
according to qualification and service rendered. We employ 
from 1,000 to 1,200 people. Our employees seem satisfied 
with our plant. We have no trouble nor indications of trouble 
with labor. Dayton boasts of having 1,000 or more indus- 
tries, and with one exception all of its plants are open as is 
ours. The unrest to which you and so many others refer does 
not originate with the employee. It is conceived and is propa- 
gated by union labor walking delegates and radicals whose 
sole ambition is to cause all the trouble possible with the 
ultimate aim, through the co-operation of the Socialists, to 
throw the whole country into discord, insubordination, strikes, 
and finally revolution." 

The Owl Drug Company. 
san francisco. 

(1919) W. M. Berg, secretary and general manager, 
reports that the only plan the company has tried is a distribu- 
tion to the managers of 30 retail stores of a percentage of 
profits varying from 5% to 8%. The method of ascertaining 



152 THE NATIONAL CIVIC FEDERATION 

the profits is described in detail in a communication by the 
company to its managers. 

Palmer Lime and Cement Company. 

NEW YORK. 

(1919) Charles L. Leo, general manager, November 12: 
'We have consistently tried to work out a plan to put in 
effect in our organization, to distribute the profits among 
salesmen, office help and employees at the plant, but have not 
as yet been successful in arriving at a plan which does not 
carry with it some dangerous elements. We are at the present 
time operating under a bonus plan at the plants, whereby 
employees who do not miss time in the three months period 
receive a bonus of 10% of the wage earned at the expiration 
of the bonus period. This, however, does not apply to the 
sales force or office force." 

Patton Paint Company, 
milwaukee, wis. 

(1919) Ludington Patton, president, November 17: 
"In reference to our employees' investment and profit 
sharing plan: Date of installation, November, 1910; average 
number of employees, 600; interested in plan, 65%. The 
employees appreciate the benefits of the plan and are entirely 
satisfied with its operation. We consider the plan to have 
been of material assistance in preventing labor disturbances. 
It is not limited to any one class, but its privileges are ex- 
tended to any one who has been in our employ for more than 
one year. We regard our employees' investment and profit 
sharing plan as an unqualified success and would not consider 
its discontinuance under any circumstances." 

B. Peck Company. 

DEPARTMENT STORE. LEWISTON, MAINE. 

(1919) Frank Peck, treasurer, September 8: 
"Our bonus plan was again established this year, after 
three years' discontinuance, which was not caused by any 
fault of the plan, other reasons prevailing. The results are 



PROFIT SHARING REPORT 153 

amply sufficient to warrant us to continue it. We employ 
about 100 people, practically all participating. 

"In addition to the special distribution plan, we have a 
sales bonus plan for salespeople, which is proving remarkably 
efficient. This plan is based on department quotas to cover 
fixed selling percentages, the bonus being paid on sales in 
excess of quotas. Our plan does not individualize the quotas 
— it departmentizes them — for we feel stock keeping, etc., is 
quite as important as selling. 

"In addition to sales bonus and special distribution, 
salaries are automatically adjusted every season — each six 
months. Our department managers are paid a percentage 
of their increased sales and a percentage of their net profits. 
We are showing such excellent gains in sales over a year ago 
that we feel we owe no small part of them to our bonus plans. 
We feel, in the main, we are enjoying the confidence and good 
will of our employees." 

Pennsylvania Engineering Company, 
blast furnace constructors. new castle, pa. 1916. 

(1916) In December, 1915, the company announced 
that if the earnings of the business during 1916 were sufficient 
after payment of an 8% dividend on the stock a bonus on 
wages would be given to employees who had been with the 
company three months or longer. The bonus will be 10% 
or less, as may be justified by the amount of the net earnings. 
There are about 500 employees. 

(1919) E. W. Beadel, president, October 9: 
'The plan was not acceptable to the majority of the em- 
ployees. It was to give a 10% bonus on the yearly wage, or 
salary, received to all the people who had been in our employ 
over three months. There were about 400 employees, con- 
sisting of machinists, boilermakers, blacksmiths, pattern 
makers, foundrymen, electricians, draftsmen, general office 
force and miscellaneous labor. The whole foundry depart- 
ment, comprising practically 100 men, refused to accept the 
bonus, but insisted upon an immediate advance of 2 cents 
per hour in place of taking the bonus, which at that time 
would have been 4^ cents per hour. The electricians and 
cranemen insisted upon the same arrangement as the foundry, 



154 THE NATIONAL CIVIC FEDERATION 

and this was followed up by the common labor preferring 
cash in hand to a bonus. When we got through with the 
adjustment less than one-third of our employees accepted 
the bonus, and that third was made up of machinists, boiler- 
makers, draftsmen and general office force. 

4 We cannot find that the bonus has helped us any in 
avoiding labor difficulties; neither do we feel that it has acted 
as an inspiration to better, or more, work, because, after a 
few months it seems to be accepted by all as a right and not 
as a privilege. In one way we probably get some help be- 
cause of the fact that the bonus is paid only once a year, and 
then only to those who are in our employ the last day of the 
year. As a consequence, if an employee has been working 
under the bonus plan for six months or more, he is very loath 
to leave because the amount coming to him under the plan 
represents too much of a sum to leave behind carelessly. 

"Our offer to our employee's was to this effect — that after 
the company had set aside 8% on the capital stock for its 
stockholders, the next money earned would go to the em- 
ployees until such an amount as would pay 10% on the yearly 
income of the employees had been accumulated. So far we 
have been able to earn sufficient profit to give the bonus each 
year; but I am sure that if for any reason we should not earn 
the bonus, there is going to be a lot of dissatisfaction, and the 
fact that we gave to the bonus people two or three times more 
in bonuses than would have been received by them had they 
taken the cash raise given the foundrymen, electricians, etc., 
at the beginning, is not going to keep them from feeling that 
they have gotten the worst of it." 

The Pettibone-Peabody Co. 
importers and retailers. appleton, wis, 

(1919) J. D. Steele, president, December 29: 
"In a relatively small and compact organization such as 
ours, and in a business of the retail distribution of dry 
goods and women's apparel, we have found it simpler to 
make direct payroll adjustments rather than to work out any 
profit sharing or bonus plan. For many years we have had 
a pension system under which employees steadily engaged 
with this company for 25 years may retire at the end of that 



PROFIT SHARING REPORT 155 

period on 60% of their pay at the time of their retirement, 
but in no case to exceed $900 per year. We have several 
now retired under this plan and several others who are eligible 
but not yet retired." 

Plymouth Cordage Company, 
north plymouth, mass. 1912. 

(1916) When the company is unusually prosperous and 
able to pay the stockholders an extra dividend, the employees 
are allowed to share in the extra profits. They are given the 
same percentage, based on wages, that the stockholders re- 
ceive. 

The custom is to give the investors 4% upon their capital, 
the company considering that to be a fair return. Anything 
earned in addition is regarded as an extra dividend. 

During the hearings before the state arbitration board in 
connection with the settlement of a dispute lately, the men 
stated that they would prefer not to have the profit sharing 
arrangement, because those who leave the employ of the com- 
pany have no opportunity to participate, and they prefer to 
have any increases in regular weekly wages. 

(1919) The company reports, October 31, that it has 
not made any change in its distribution of profit sharing. 

Potomac Savings Bank, 
washington, d. c. 

(1920) Under the plan of this bank announced for 
February 16, the employees are guaranteed monthly draw- 
ing accounts equal to the amounts theretofore paid as salary. 
After all expenditures by the bank, including the dividend 
to stockholders, have been deducted from the gross earnings, 
the balance is to be divided into two parts, one-half for the 
bank and one-half for the employees. Concurrent with their 
drawing accounts, the employees were receiving more than 
70% of the salaries theretofore paid them. 



156 the national civic federation 

The Pullman Company. 

CHICAGO. 

(1916) Car service employees who have been in the 
service 15 years or more receive at the end of each year 5% 
of their total annual earnings^ The same class of employees 
who have been in the company's employ one year or more 
receive a month's pay as a reward for a clear record during 
the year. 

(1919) E. S. Taylor, assistant to the president, Sep- 
tember 4: 

"If this company contributed information on this subject 
at the time of your publication in 1916, you will appreciate 
that the situation has somewhat changed since then, for, as 
you are probably aware, the operation of our cars, including 
repair shops, has been taken over by the government and is 
now under the jurisdiction of the United States Railroad 
Administration. The subject is one of considerable interest, 
and I regret that we have no information available which 
would be of assistance to you at this time." 

Pyrene Manufacturing Company, 
appliances for fire protection. new york. 

(1919) Of 527 employees, male and female, in the 
company's factory, general office and sales force, 261 par- 
ticipate in its profit sharing plan. This is an additional com- 
pensation plan based on the employee's time of service and 
the company's dividends. 

The plan has been operative since January, 1917. In 
the opinion of the company the employees "consider it fair 
and equitable and a proper basis upon which they may enjoy 
the prosperity of the company." (Pamphlet.) 

Reed-Prentice Company. 

manufacturers of machine tools. worcester, mass. 

1915. 

(1916) A so-called "war bonus" was paid to the em- 
ployees in September, 1915, and continued monthly there- 
after, the total for the first four months being about $32,000. 



PROFIT SHARING REPORT 157 

About 775 employees shared in the January distribution, 
approximately 550 of whom were machinists. A strike, which 
is understood to have been for recognition of the machinists' 
union, was begun at this plant about the time of the inaugura- 
tion of these bonus payments. When the company is operat- 
ing with its full complement of help, the distribution, if con- 
tinued, will affect about 1,500 men. 

(1919) A. E. Newton, vice-president and general man- 
ager, October 9: 

'We have in force at the present time the same incentive 
system as regards paying our employees for quality and quan- 
tity produced. We had in addition to our incentive bonus 
system a so-called war bonus whereby we paid the employees 
a bonus equivalent to 20% of their monthly earnings. Our 
employees did not like this method, and it was very evident 
that they would prefer this bonus to be added to their regular 
wage, which we finally decided upon, and carried it into effect 
in August, 1916. We do not believe in any so-called profit 
sharing scheme, but do believe in paying maximum wages 
for quality and quantity in production. We believe that the 
worker is more contented with this system of payment than 
any other, and as a matter of fact any system of wages or 
salaries is a distribution of profits." 

Roos Brothers. 

RETAIL STORES. SAN FRANCISCO, CAL. 1915. 

(1916) In December, 1915, this firm divided a share 
of its profits among the employees in its three stores. The 
heads of departments and their assistants participated directly 
in the distribution and all other employees who had been with 
the firm one year or more received premium-paid insurance 
policies for $250, $500 and $1,000, respectively, according 
to length of service. The firm has between 500 and 600 
employees. 

(1919) Louis J. Klein, secretary, September 16: 
"The profit sharing plan as adopted by us during 1916 
is still in effect with gratifying results. While we have ap- 
proximately 500 people in our employ, there are about 100 
of these that share in the profits, and we feel confident that it 
is the means of obtaining better results from these employees. 



158 THE NATIONAL CIVIC FEDERATION 

4 While the profit sharing plan is confined to the depart- 
ment heads and their assistants, our selling force have another 
plan that enables them to increase their salaries, by establish- 
ing a selling rate, which is obtained by taking their past 
experience over a number of years, and by getting the aver- 
age, and consider that amount as their selling figure, and 
everything over and above that amount we grant them 2%. 

i4 In addition to the above, we insure the lives of all of 
our employees that have been with us from one to three years 
for S250; from three to five years, $500; and over five years, 
$1,000." 

Rumford Chemical Works, 
providence, r. i. 

(1916) The employees who have been in the service 
of the company continuously for two years receive at the 
end of that period a bonus equivalent to 5% of their annual 
wage. All employees participate from department heads 
down to and including the rank and file. 

The company formerly had a plan of giving such bonuses 
graduated according to the number of years in the service 
and the amount of wages received but gave it up because it 
became too burdensome. It regards the present plan as "very 
beneficial to us in making our help especially loyal." 

(1919) William M. Sweet, treasurer, November 12: 

"We have made no change in this plan for several years. 
Briefly, our plan, if the profits of the business warrant it, is 
to distribute at the end of the year to those employees who 
have been with us two years or more a sum approximately 
equivalent to 5% of the amount of wages they have earned 
during the year. This distribution is made on the last day 
of each year. The plan has been in force for at least 10 
years and seems to have given satisfaction to our employees. 
It is not limited to the heads of the departments, but includes 
the rank and file in the factory. We employ about 500 help, 
and about 200 participate in the distribution. We think the 
plan has been the means of allaying unrest among our older 
employees, but anticipation of participating in it does not 
seem to affect the newer comers in these days. Formerly, 
when help was less restless, it undoubtedly had a very excel- 



PROFIT SHARING REPORT 159 

lent effect and there was considerably less number of floaters 
among our employees before the war. We do not believe 
that it is fair to us to pay anything extra to employees who 
have not demonstrated that they are willing to make their 
employment with us of a permanent character. Perhaps the 
payment should be made at the end of one year rather than 
two years, and we have this in contemplation on possibly a 
sliding scale." 

Samson Cordage Works. 

manufacturers of braided cords and cotton twines. 

boston, mass. 

(1919) Herbert G. Pratt, president and treasurer, No- 
vember 10: 

"We installed a profit sharing plan three years ago, but 
did not apply it to wage-earners, though overseers were in- 
cluded. We are convinced that such a plan is not applicable 
to the average cotton mill employee, and it is doubtful if it 
has been warranted even for the overseers. We are con- 
tinuing the plan, however, considering it simply a method 
of necessary increase in salaries due to present conditions. 

4 We think our establishment of a shop committee last 
spring has aided in modifying the tendency toward labor 
troubles. This committee has been elected with the under- 
standing that they were not to help manage the business, but 
were to keep the management and employees in closer com- 
munication, so that the troubles of each could be better under- 
stood. The wage-earners still seem to prefer a definite weekly 
wage, either on the hourly rate or on the piece-work rate 
where possible, and we are beginning to think we may have 
some success in a method which we are trying of dividing 
'fifty-fifty' with the employees the savings in operating cost 
of a department." 

Sears, Roebuck & Co. 

MAIL ORDER HOUSE. CHICAGO, ILL. 1912. 

(1916) Each employee receiving a salary not exceeding 
$1,500 per year who has been with the company at least five 
years is given 5% of his last year's salary; if he has been 



160 THE NATIONAL CIVIC FEDERATION 

with the company six years, 6%, and so on until lO^c is 
reached. After 10 years the percentage remains 10%. 

(1919) John Higgins, for the trustees, November 12: 

"This plan has undergone no change since its beginning 
in 1912. The number of anniversary checks issued in the 
last fiscal year, 1918, was approximately- 4,400: the amount 
8320,000. 

"The company inaugurated the 'employees' savings and 
profit sharing pension fund" on July 1, 1916. The number 
of participants November 12, 1919, was 7,352: the number 
of employees being 25,492. It is intended that this plan will 
furnish to those who remain in the employ of the company 
until they reach the age when they retire from active service 
a sum sufficient to provide for them thereafter, and that even 
those who achieve a long service record, but who may not 
remain with the company all of their business life, will have 
accumulated a substantial sum. 

"An employee in order to participate must deposit in 
the fund 5% of his salary. The company contributes a sum 
equal to 5% of its net earnings. Xo employee may deposit 
more than 5% of his salary, and in no case more than 3150 
per annum. 

"The fund is handled, intrusted and invested under the 
direction of a board of five trustees, to be selected bv the 
board of directors of the company, three to be officers or 
directors and two employees (not officers or directors). 

"A feeling of general satisfaction exists toward the plan. 
It could hardly be otherwise, for the company's contributions 
thus far have amounted to more than S3 for ever}* dollar de- 
posited by the employee, and these contributions are not sub- 
stituted for wages; wages paid are at the market rate, or 
better. 

"There has always been a general spirit of harmony be- 
tween employer and employee in our company. T\ e do not 
have many members of organized labor in our employ, but 
those whom we have participate like others and seem thor- 
oughly satisfied that the plan is a good one. They owe 
allegiance to their union, however, and would be powerless 
if called upon by their union leaders to strike. 

"All employees without any distinction whatever are 
eligible after three years of service. 



PROFIT SHARING REPORT 161 

"The plan has not been a disappointment in any way. 
Its founders wished to reward faithful service, and permit the 
employees in a special way to share in the profits of the 
business. These ends it has certainly accomplished. No 
attempt has been made even roughly to estimate in dollars 
and cents the effect of the plan on the company's welfare. 
The effect is reasonably expected to be good. Statistics cover- 
ing length of service and average output would have no sig- 
nificance in this respect because of the effect of the war on 
our organization through the calling of men into national 
service and the hiring of women to take their places, and 
finally the reinstatement of the men after their discharge by 
the government." 

The company gives out much information, in printed 
form, on the subject. 

Security Cement and Lime Company, 
cement products. hagerstown, md. 

(1919) A profit sharing plan put into effect by this 
company in 1916 is in force. The company considers it an 
unqualified success as far as it has gone, but regards the time 
of operation too short for a thorough test. 

Of the 450 employees, about 65 participate. The plan 
applies only to salaried as distinguished from hourly em- 
ployees, and there have been no great difficulties incident to 
its application. The company states the only labor troubles 
during its history have been "the growing inefficiency and 
high labor turnover common to all industries during the last 
few years." The profit sharing plan has undoubtedly re- 
sulted in "tying the salaried employees closer to the com- 
pany, in fewer changes and more loyal work than would 
otherwise have been the case." 

Seneca Falls Manufacturing Company, 
seneca falls, n. y. 1915. 

(1916) At the end of each month the company adds to 
the pay of all employees 10% of the amount earned by them 
during that period. The company states that it decided to 
share the profits with the employees because of the prosper- 



162 THE NATIONAL CIVIC FEDERATION 

ous times and the fact that it had little competition in the 
vicinity. 

(1919) E. R. Smith, works manager, October 30: 
"Some time back we did give our employees extra money 
from time to time, which was due mainly to the fact that our 
wage rate was not high enough and we deemed it advisable 
to remunerate our men in this way rather than to advance 
our rates. 

'There is no doubt that a profit sharing plan of some 
kind will be of great benefit to all concerned, but it has been 
our experience that anything that is given away, so to speak, 
is very often not appreciated. We think that if anything of 
this sort is to be a success it should be along the lines whereby 
workmen will be permitted to buy stock at a certain price, 
in which case they would be on a par with other investors, 
regardless of whether they worked in the shop or not. In 
order to help the workmen buy the stock we think it would 
be advisable to carry the stock for them, that is, allow them 
to buy it at a certain price and pay a certain amount per 
month on it until it is paid for. This does not smack of pater- 
nalism and makes the men feel free and independent." 

■ 

The Seng Company, 
mechanical devices, etc., for furniture makers. 

CHICAGO. 

(1919) The company pays substantial bonuses for at- 
tendance and service, equal in effect, it believes, to a profit 
sharing system. Previous to July 1, 1919, the employees 
received a straight 10% bonus on wages earned. The attend- 
ance bonus is believed satisfactory in that about 85% of the 
employees are now earning the full 12%% bonus. The 
average number of employees is 375. The attendance bonus 
of 1214% on earnings is paid weekly, and a three-day vaca- 
tion with pay, or three days' extra pay in cash, is given in 
case of a perfect attendance record for six months, not neces- 
sarily in succession. 

There is also paid a service bonus, beginning in the sec- 
ond year at 2% of earnings and rising to 15% after 15 years' 
service. A life insurance of $500 is given an employee who 
has completed six months' service, the amount rising to 



PROFIT SHARING REPORT 163 

$1,000 at the end of the second year. The company has also 
provided a weekly indemnity of $5 for total disability result- 
ing from sickness or accident. An industrial council assists 
the company management. (Pamphlet.) 

Seward Trunk and Bag Company, 
petersburg, va. 

(1919) J. W. Seward, November 13: 

"Regarding yours of the sixth, we are paying at the pres- 
ent time bonuses to employees, based on excess living expense 
over a certain basis that we consider normal. Most of the 
officers of this concern, superintendents, foremen, in fact, 
all of the better grades of men, have an interest in the business 
in the way of stock ownership. As for any plan that would 
satisfy labor, it is unknown to us, and we believe it is un- 
known to any other human being under the sun." 

Shepherd Construction Company, 
wilkes-barre, pa. 

(1916) The company states that about 20 years ago it 
attempted an experiment in profit sharing but later on re- 
stricted it to foremen arid heads of departments, on account 
of losses and annoyance experienced through constant diffi- 
culties with organized labor. 

Nevertheless, in December, 1914, a new plan was put in 
operation under which all employees who have been with the 
company one year receive a dividend on their annual wages. 
The first distribution was made in January, 1916, at the rate 
of 8% on the year's wages. If the result proves to be in- 
creased efficiency and interest, it is stated that the employees' 
share in the profits will undoubtedly be increased, but the 
company regards the plan thus far as purely experimental. 
The president states: 

'We do not discriminate in our employment of labor; 
politics, religion and organizations have nothing whatever to 
do with our employment of men. We do ask that they be 
fitted for the position which they are seeking, by prior experi- 
ence and training." 



164 THE NATIONAL CIVIC FEDERATION 

(1919) W. C. Shepherd, president, September 4: 

"Our profit sharing plan is still in force and includes the 
rank and file of our employees. There has been no change 
since 1916. 

'We are disappointed in the operation of the plan since 
it has applied to all of our employees the last five years 
— disappointed because there has been no interest expressed 
or shown, or tendency on the part of our employees to express 
any appreciation of the working of the plan. For example, 
we have a suggestion box in connection with our work at our 
plant asking for suggestions, criticisms or expressions of 
any one in connection with our business. There has not been 
a single suggestion put in this box for three years. 

'The war, of course, disrupted the building business, in 
fact for a year or more the business was not an essential one 
and prohibited by the government, and even yet it has not 
by any means recovered a fair average. 

'We find our men largely indifferent in their performance 
of work and inefficient in some respects as applying to new 
employees. Their output is becoming more limited and the 
tendency at times seems to be centered in one thing — more 
wages, more wages, more wages. We find that the output of 
the average mechanic in our line of business to-day is from 
one-third to one-half what it was five or six years ago. 

'We have no objection to the organization of men, or the 
spirit of collective bargaining, in order to bring about a better 
condition among employees, and we are willing at all times 
to talk over matters with our own people, no matter what their 
affiliations might be. We think, however, all classes of labor 
should be represented in such counsels, whether they are or- 
ganized union men or not. To assume that a minor portion 
of employees shall bind the entire lot is not American in 
principle and cannot properly be carried out. 

'We are a believer in the thought that there is something 
more than capital and labor involved in these times, and in 
the spirit manifested by the peoples of the world as shown 
throughout numerous countries since the great war. We be- 
lieve that capital and labor (organized) represent but a small 
portion of the population of this country, and the great 
middle ground composed of merchants, farmers, professional 
men and those of many vocations are not represented at all 



PROFIT SHARING REPORT 165 

in any conferences. The time is here when these different 
interests must be represented, and We hope that the Presi- 
dent's action at this time will be broad enough to lead to this 
result. 

'Whether we shall abandon our plan or not will depend 
upon the action of our employees within a year after normal 
conditions obtain." 

Shuttleworth Bros. Company, 
rug manufacturers. amsterdam, n. y. 1916. 

(1916) The company announces that on July 1 they 
will pay a bonus of from 1 to 5% to employees of the plant. 
This distribution will be made semi-annually, on July 1 and 
January 1 of each year. On July 1 of this year all men and 
women employed in the plant for a period not less than one 
year will be entitled to a bonus for the preceding six months' 
work. Those employed by the concern for a period of one 
year will receive 1% of their total wage during that period; 
for two years, 2%, and so on up to five years' service. Those 
in the employ of the company five years or more will receive 
a bonus of 5%. 

(1919) From a representative of the company, Octo- 
ber 10: 

'We did pay a bonus to our employees in the year 1916. 
But this was discontinued about a year ago, as it did not prove 
satisfactory and did not remedy the troubles as we expected 
it to. We discontinued this plan with simply adding the 
bonus that was paid semi-annually to the regular hour rates- 
of all our employees." 

Ernest Simons Manufacturing Company. 

manufacturers of sheets, pillow cases, etc. 
portchester, n. y. 1910. 

(1916) All operatives who have been continuously in 
the employ of the company through the calendar year receive, 
on the next ensuing February 15, a bonus of 5% of the wages 
earned during that period. Qf the 800 employees about 600 
participate. If the business does not warrant a 5% distribu- 
tion a smaller amount will be paid if possible. In 1915 no 



166 THE NATIONAL CIVIC FEDERATION 

distribution was made on account of relatively small profits 
earned. In February, 1916, there was a 5% distribution 
among 900 employees. An official of the company makes 
the following comment on the plan: 

'We are inclined to the belief that there is a slight in- 
crease of loyalty and that thrift is somewhat encouraged, but 
find no diminution of cost to manufacture. We consider this 
distribution a good investment — not so much that our em- 
ployees are any more loyal, but we think they feel that they 
are somewhat interested in the work and that this interest 
redounds to our benefit." 

(1919) Andrew Burns, vice-president, September 4: 

"Our profit sharing or special distribution plan is still in 
force. The only variation made in the plan since 1916 has 
been that of shortening the qualifying period to six months 
instead of one year. The number of employees participating 
ranges from 700 to 800. Amount has ranged from 10 to 
25% upon year's wages. 

'We have avoided serious labor difficulties by giving care- 
ful consideration to the demands of our employees and can- 
not say to what extent the profit sharing plan has had an in- 
fluence in controlling labor difficulties. 

"We have found that profit sharing with us has, in a meas- 
ure, failed to create the desired affiliation and interest which 
would cause the employees to feel that the interest and wel- 
fare of the business was their interest and welfare, or in other 
words that they were a part of the business and not simply 
employees. 

'The policy of our company is to create a feeling of co- 
partnership and co-interest, and we have set forth this policy 
by preaching and practice, but we regret to say that the re- 
sponse has not met our highest hopes. The employees seem 
to be so firmly fixed in the idea of being simply employees 
that they cannot be pried out by any co-operative or profit 
sharing privileges. However, we have not quit the game and 
still hope for success." 

The Robert Simpson Company, Ltd. 

TORONTO. 

(1919) In March, 1919, the company inaugurated a 
profit sharing plan in which 1,867 employees are eligible to 



PROFIT SHARING REPORT 167 

join. Of that number 1,383, or 74%, now participate. The 
company contributes annually 5% of its net profits to what 
it calls an employees' savings and profit sharing fund. Each 
participating employee deposits to the credit of the fund 5% 
of his salary annually up to $100. He may also invest in 
capital stock of the company. From the fund is supplied an 
important retirement contribution, or an accumulated sum to 
an employee serving for an extended period of years, or a 
death benefit. 

Alexander Smith and Sons, 
carpet manufacturers. yonkers, n. y. 1911. 

(1916) Employees who have been in the service of the 
company for ten or more years receive semi-annually an 
amount equal to 10% of their earnings for the last preceding 
six months. Those in its service between five and ten years 
receive a bonus equal to 5% of their earnings for each six- 
month period. It is reported that about $600,000 has been 
distributed since the inauguration of the plan, the last semi- 
annual payment being about $75,000. 

(1919) Arthur Laud, secretary, November 12: 

"It has been our custom for the past eight years to dis- 
tribute among our employees a check equal to a percentage 
on their respective earnings for a six months' period. The 
amount of percentage has been changed from time to time 
and this last six months has been arranged on the following 
basis: One year, 5% ; two years, 6% ; three years, 7% ; four 
years, 8%; five years, 9%; six years, 10%; seven years, 
11%; eight years, 12%; nine years, 13%; ten years, 14%; 
eleven years and over, 15%. 

"August 1 was therefore the sixteenth semi-annual pay- 
ment. Our method of payment is twice a year ; for six months' 
period ending December 31 we make payment February 1 
following; for six months ending June 30, August 1 following. 

'We also have an honor roll made uo of employees who 
have become old in our service and have been with us at least 
20 years. We have 68 names on the list. We generally allow 
an amount every month, equal to a week's wages, our mini- 
mum being $20. 



168 THE NATIONAL CIVIC FEDERATION 

"At the present time we employ about 5,000 operatives, 
of which about 90% participated in the last distribution, the 
others being in our employ less than one year." 

Solvay Process Company, 
syracuse, n. y. 1888. 

(1916) The executive officers, foremen and sub-fore- 
men share in a profit distribution proportional to salaries 
and based on the amount of dividends paid to stockholders. 
Participants are divided into three classes. Members of the 
second group receive double, and members of the third group 
receive three times the proportion paid to members of the 
first group. Eligibility to these classes depends upon the 
nature of the work performed, length of service and recard 
of the employee. 

In addition, a bonus plan was put into effect in 1910 
whereby all employees not sharing in the percentage of profit 
plan were given a certain sum depending upon the amount 
of salary and length of service. Employees in the service 
of the company for two years receive 2% of their salary, and 
the rate increases up to 6% for those who have been with the 
company 10 years or more. 

With reference to the practical effects of the plan, the 
company states: 

'This plan puts a premium on length of service and 
has reduced the number of changes in the working force. 
The men, we believe, are beneficed by i% because b> receiv- 
ing a lump sum once a year, they are more likely to have 
this money available to make payments on obligations, to 
buy real estate or make investments than if it had been 
necessary for them to save an equal amount out of their 
weeklv wages during the year." 

(1919) Thomas V. Hodges, safety engineer, October 14: 
'There have been no changes from the plan as outlined 
in 1916." 



profit sharing report 169 

The South Norwalk Electric Works. 

connecticut. 

(1919) Albert E. Winchester, general superintendent, 
November 21: 

"This is an undertaking engaged in the production and 
distribution of electrical energy for local industry, commer- 
cial, domestic and public needs. Therefore, by the very 
nature of its 24-hour service 365 days per year, which ebbs 
and flows by reason of weather conditions, season changes, 
irregular demands and otherwise, rather than by more arti- 
ficial stimulation, its functions and the conditions that govern 
it are quite unlike those of the general manufacturing busi- 
ness that has a comparatively much larger number of skilled 
and unskilled employees. There is not the opportunity in 
such a public utility as this for its employees to speed up 
both demand and supply that there is in the usual manufac- 
turing field. 

"In instances of extraordinary faithfulness to duty, at 
times of disaster and distress, we have given money tokens 
in testimony of our belief that good deeds should be re- 
warded. At one time we started to give a money bonus pro- 
portioned to the wages paid. At first we thought it was a 
joyful surprise to its recipients, but the next year the fact 
that it was expected as a right was impressed upon us, regard- 
less of a decline of prosperity which was no secret; so the 
policy was dropped. Since then conditions have been just 
as good as before and the indiscriminate bonus has never been 
missed. If more pay is desired and deserved, if it can be 
afforded, it goes into the pay envelope and the one who gets 
it knows that he is believed to be worthy and is likely to live 
up to such belief, if he has the right stuff in him. 
Whoever is willing to accept the proceeds of prosperity 
should take his turn at accepting less in the time of adversity." 

E. D. Starbuck & Co. 

DRY GOODS AND CARPETS. SARATOGA SPRINGS, N. Y. 1914. 

(1916) About 35 employees, not including officers of 
the company, share in a semi-annual profit distribution based 
upon wages and length of service. The announced intention 



170 THE NATIONAL CIVIC FEDERATION 

of the company was to give for the first six months of the year 
a bonus of 1% of the total sales, distributed according to 
salaries, and for the second six months a share in the profits, 
not determined in advance, but guaranteed to be not less than 
1 % of the sales. Only those who have been in the company's 
employ six months are eligible to participate. The president 
of the company considers the plan a success. 

(1919) E. D. Starbuck, president, October 11: 
"We had a bonus plan a few years ago, and it worked 
very well. However, when we got in the war and the gov- 
ernment asked us to buy liberty bonds each of our employees 
wished to buy a bond, and we gave up the bonus plan and 
paid the amount of the probable receipt of the bonus every 
week — raised wages so the amount received would equal or 
exceed the semi-annual bonus system. This has been most 
satisfactory, and we are all well pleased with the change. 
Our force is only 36 in number and hardly a criterion for 
larger business." 

Star-Peerless Wall Paper Mills, 
joliet, ill. 1914. 

(1916) All employees who have been in the continuous 
employ of the company for a period of 12 months, barring 
necessary and excusable absence, and barring the customary 
brief layoff during shutdown following sampling, receive a 
sum of money equivalent to 1% of the total amount paid 
them in compensation during the period named for each year 
of service with the company. That is to say, an employee 
of one year's service would receive 1% of his year's wages, 
one of two years' service 2%, and so on until a maximum of 
10% for 10 years or more of service is reached. 

All factory employees are included in the plan; but not 
salesmen, their compensation being based upon results se- 
cured. 

Questions which may from time to time arise, such as 
reasonableness of an excuse for absence, length of time in 
service, etc., are submitted to a board of arbitration, com- 
posed of three members, one from the office, one from the 
superintendents, and one from the mill. 

In outlining the plan to its employees the company said: 



PROFIT SHARING REPORT 171 

"It is an established fact that a spirit of hearty co- 
operation between employer and employee is productive of 
the best results in any business, not only to the employer 
but to the employee as well, for the success of the employee 
is as certainly dependent on the success of the enterprise 
as is the success of the employer. 

"The cost of this reward of merit to the company will 
be a very considerable amount of money. The ability of 
the company to give you this money is dependent upon a 
maintenance of the success which it is at present achieving. 
Should this success diminish, the expenditure of this sum 
might be a hardship upon the company. For this reason 
we reserve the privilege of amending or entirely withdraw- 
ing the proposition, if circumstances at any time, in our 
judgment, render it advisable to do so." j 

(1919) Thomas F. Goodson, manager, September 2: 
'The plan was discontinued by us about a year ago as 
it did not increase interest or efficiency and was considered 
as charity by some, and others felt it was used to prevent 
wage increases." 

i 

Paul Steketee & Sons. 
wholesale dry goods. grand rapids, mich. 1903. 

(1916) A cash bonus is distributed to all employees 
who have been employed for five years continuously after 
taking the annual inventory. The amount of bonus is based 
on the actual salary they have received during the preceding 
year. The percentage is optional, depending on the profits 
made. The minimum amount paid thus far is 5%, and the 
maximum amount 10%. Every employee is included in the 
plan. Average number of employees is 220 — of these 78 
received a 10% bonus on January 20, 1916, for the year 
1915. 

The company reports: 

"We are not entirely satisfied. We would like to find 
a satisfactory plan to reward efficiency and merit, as well 
as faithfulness. Our present one is not comprehensive 
enough and it permits many to have a bonus who are not 
really entitled to reward as much as others who are not in- 
cluded in our present plan. We heartily believe in the 
profit sharing plan, in which all who are entitled to it have 
a fair chance." 



172 THE NATIONAL CIVIC FEDERATION 

(1919) Harold A. Steketee writes, November 6, that 
the service bonus plan adopted by the company in 1905 is 
still in force, and affecting the rank and file of the employees. 
The favorable feeling toward the plan has been a means of 
modifying the tendency toward labor troubles, but it is not 
entirely a success for the reason that the employees are apt 
to think of the bonus as additional salary. 

John B. Stetson Company. 

HAT MANUFACTURERS. PHILADELPHIA, PA. 1898. 

(1916) The company has in effect several plans in the 
nature of extra compensation above regular wages. The plans 
have been changed somewhat from time to time to meet the 
special conditions of different departments, but in general 
they may be classified under three heads — a Christmas dis- 
tribution, a bonus for continuous services, and a stock allot- 
ment plan. The Christmas gifts are made on the basis of 
the year's record of the employees, and consist of cash, com- 
modities, building association stock, life insurance policies 
and common stock of the company. 

The bonus for continuous service was originally 5% on 
annual wages for employees, in one department, who re- 
mained with the company a full year, but for the past eight 
years it has been 20% and applies to nearly all departments. 
During the first year of this plan about 30% of the employees 
in the department affected worked steadily through the year, 
while during the past seven years practically all the employees 
of the department, numbering 1,000, have earned the 20% 
bonus. The company states that this bonus has in no way 
affected the regular wages, which have been increased more 
than once since the beginning of the bonus system. 

Since 1902 an annual allotment of stock has been made 
to deserving employees, at the discretion of the president. 
For this purpose 5,000 shares were set aside in charge of five 
trustees. Any stock allotted to an employee is held by these 
trustees for 15 years before final delivery. No payments 
toward its purchase are required of the employee, but the 
stock is credited with all dividends declared, less 5% per 
annum on the unpaid balances from year to year. The stock 
being allotted at par and the dividends being now at the rate 



PROFIT SHARING REPORT 173 

of 25%, the stock is fully paid for in about five years and 
thereafter the employee receives the full benefit of the annual 
dividends. If an employee so desires he may withdraw, for 
his personal use, one-third or less of the dividends applying 
to his stock in any one year instead of having the full amount 
credited toward its purchase. 

Employees to whom stock is allotted are required to sign 
an agreement in which all the terms and conditions of the plan 
are set forth. The company reserves the absolute power to 
discharge an employee, with termination of all his rights 
under the agreement, except that he is paid in cash and not 
in stock the amount to his credit on the company's books. 
Where employment is terminated by physical or mental in- 
ability of an employee to perform his duties, however, the 
stock or cash held by the trustees to his credit is delivered to 
him, or in case of the death of an employee it is delivered to 
his personal representatives. 

The stock has now a market value of about $400 per share 
and the total allotment to employees thus far is worth approxi- 
mately $2,000,000. There are upward of 4,000 employees, 
of whom about 800 have been allotted stock under this plan. 

Considerable publicity has been given to a strike affect- 
ing one department only of this company (March, 1916). 
Interest was keen because some of the men were stock owners. 
The impression that the dispute was due to the discharge of a 
man who tried to organize the employees is erroneous. Also 
it had no relation to the profit sharing plan. 

(1919) Milton D. Gehris, second vice-president, No- 
vember 21 : 

'Under what may be called our profit sharing plan may 
be included our building and loan association, our bonus 
system, our stock distribution plan and the latest group in- 
surance. 

Mr. Stetson organized the building and loan association 
about 40 years ago to assist his employees in securing their 
own homes. The shares of stock in the association are allotted 
to the men from year to year, the company paying the dues 
as long as the employee remains in our employ. Over 5,000 
shares are being carried for the benefit of the employees at 
the present time. More than 700 have been assisted in secur- 
ing their homes. 



174 THE NATIONAL CIVIC FEDERATION 

"Hatters used to be known as 'tramp hatters,' and they 
really lived up to their reputation. In 1897, the year we 
put our bonus plan into effect, <only 35% of our hat sizers 
worked anywhere near steady. To overcome this Mr. Stetson 
offered to pay the men 5% on all they could earn for the 
year, payable to them at Christmas time, provided the men 
worked steady during the entire year. As a result 50% of 
the men worked that entire year. The result was so gratifying 
that the b3nus was made 10% for the following year and 
67% of the men worked during the entire year. In 1901 the 
bonus was raised to 15% and in 1903 to 20%, and that year 
for the first time 100% of the hat sizers remained in the 
employ of the company throughout the entire year. This 
result being so satisfactory, the bonus was applied also in 
our trimming department, where female help is employed, 
and it had the same effect of holding the employees on the job. 

"About 10 years ago the plan was applied to the entire 
factory. There have been some revisions in the amount of 
bonus paid so as to equalize the earning power of the em- 
ployees of the different departments, but the plan in effect 
to-day is that every expert workman receives 10% of the 
amount earned for the year, which amount is paid to him in 
one sum the day before Christmas. All non-expert workmen 
receive 5%. 

"Eighteen years ago the company increased its capital 
stock and the board of directors asked permission from the 
stockholders to set aside 5,000 shares of common stock to be 
used by the president in rewarding faithful and efficient em- 
ployees. This stock has been allotted without one cent of cost 
to the employee. The stock is paid for out of the accumu- 
lated dividends. There is a provision in the agreement allow- 
ing an employee to draw 5% of the dividends annually and 
allowing the balance of the dividend to accumulate to pay off 
the par value of the stock. As soon as the stock is paid for 
the employee receives the full amount of the dividend, but 
the stock is held in trust by five trustees for a period of 15 
years. If the employee should leave or is discharged for 
cause during this period he receives only the par value of the 
stock accumulated. If an employee dies or is incapacitated, 
the stock is transferred to him or his estate. The par value 
of the stock is $100 per share and the market value about 
$350. 



PROFIT SHARING REPORT 175 

"On April 1 of this year we placed group insurance on 
the lives of all of our employees. As soon as an employee 
is in our service for three months he is given a policy for 
$200. This amount is increased to $400 at the end of six 
months and to $500 at the end of the first year of service 
After this $100 per year is added until a maximum of $1,000 
is reached." 

A press dispatch from Philadelphia, December 21, says: 

"Approximately 42,000 pounds of turkey and $330,000 
in bonuses and O-her awards were distributed to employees 
of the John B. Ste son Company today. The annual Christ- 
mas exercises were tinged with a patriotic coloring. A 
bronze tablet, a memorial to workmen who died or served 
in the war, was unveiled." 

Samuel Stevens Company, 
wholesale grocers. columbus, ohio. 1912. 

(1916) A percentage of annual wages, equal to the rate 
of dividend on common stock, is paid at the end of the 
year to employees who have been in the service of the com- 
pany continuously for 12 months. There are about 38 em- 
ployees, of whom 20 participate at present. All employees 
of a year's standing are eligible, except the office and sales 
force. Employees who resign or are discharged forfeit all 
claim to a profit sharing dividend on the wages earned during 
the year in which they leave. In case of death of an em- 
ployee, his estate receives the same percentage on the wages 
earned by him during the year as he received on his wages 
for the preceding year. The treasurer of the company says: 

"We adopted the plan with the view to increasing the 
efficiency of our force by eliminating frequent changes and 
inducing greater interest in the business by prompt deliver- 
ies and caring for stock, and we have found the results very 
satisfactory." 

(1919) The company reports: <4 We have no profit shar- 
ing plan in operation." 



176 the national civic federation 

John Taylor Dry Goods Co. 

kansas city, mo. 

(1919) F. M. Lee, manager, November 20: 
"Profit sharing bonus plan adopted in 1916. All em- 
ployees having been in service one year or more on the 31st 
of December share in that portion of the profits set aside for 
the bonus. Average number of employees, 625. Average 
number to share in bonus, 325. Plan is favored by em- 
ployees. Possibly helped to lower labor turnover. It applies 
to all employees, except buyers, who receive a percentage of 
profits in their departments. It is successful to a limited 
extent. Profit sharing will not be fully successful until em- 
ployees have an actual share in the stock of the company and 
share in the profits based on earnings of stock." 

Three-in-One Oil Company, 
rahway, n. j. 1904. 

(1916) A profit sharing bonus is paid to employees 
each year based on their individual annual earnings. In some 
years 5% has been paid: in others 6%. Beginning with 1913, 
an additional distribution of 4% has been made to those who 
have been with the company five years or more. 

(1919) J. Noah H. Slee, president, October 14: 

"Our plan of operation is to give the factory employees, 
just before Christmas, a percentage, which in the past has 
been 6%, of their annual wages or such time as they may 
have been in our employ during the year, and usually have 
an address made by some public man, and it creates an enor- 
mous amount of good feeling, at the time at least. 

"A further fact is our old and regular employees are 
most loyal : whether it is due to the distribution we are unable 
to state, but we feel that they at least look forward to it and 
the receiving of a large amount of money at one time, which 
we regard as a dividend on their compensation, but the per- 
centage is never taken into consideration as to the value of 
their services. 

'We pay the highest rate of wages consistent with good 
management, and the percentage is, we think, fairly distrib- 
uted because their wage represents their usefulness to the 
company and we style that as capital. 



PROFIT SHARING REPORT 177 

"We commenced this distribution in the year 1904 for 
three months of that calendar year and gave the employees 
5%. In 1905 we paid them 5% for six months. In 1906 
and 1907 we paid them 5% on the entire year. From the 
year 1908 to 1912, inclusive, we gave them 6% each year, 
and at the end of 1912 all those who had been in our employ 
five years were placed by us on what is known as our honor 
roll and given an additional 4% (making a total of 10%). 
From 1913 to 1916, inclusive, the same condition prevailed. 
In 1917 the heads of the various departments were given 10% 
and the balance of the employees 6%, but in place of giving 
them cash we distributed liberty bonds and thrift stamps. 
In 1918 we paid them 6% on the entire year. 

"Our factory is almost entirely operated by unskilled 
work people — men, women, boys and girls — and we number 
in our employ about 60 to 70. Our factory is entirely oper- 
ated by machinery. To produce the output by hand would 
require from 400 to 500 employees and five times the amount 
of floor space. Quite recently we have installed a bonus for 
those operating automatic machines if they produce over and 
above a certain number of packages. So far this seems to 
stimulate the production. We do not operate the factory on 
piece-work. 

"Having only been established for 25 years, we pensioned 
two of our employees for faithful service, they being now 
absolutely incapacitated for work." 

Title Guarantee and Trust Company. 

NEW YORK. 

(1919) The number of employees is about 1,400. Dur- 
ing last year a new plan succeeded one of a different kind 
based somewhat on the profits of the company, but not en- 
titling the profit sharers to a fixed proportion of those profits 
and applying only to about one-half of the employees. 

By the new plan extra compensation is given because of 
the high cost of living. This is paid semi-annually, and 
ranges from SI. 50 to $2 per week. An extra compensation 
based on profits is also awarded. A fund amounting to one- 
fourth of the annual net profits of the company is appro- 
priated for the benefit of those in its service the full year. 



178 THE NATIONAL CIVIC FEDERATION 

The proportions are based on time of service and amount of 
salary. 

Tracy Loan and Trust Company, 
salt lake city, utah. 1902. 

(1916) A cash distribution is made at end of each year, 
according as each employee, in the opinion of the president, 
promotes the growth and development of the business and 
renders efficient service at each individual desk, and relieves 
and assists his or her superiors. The president keeps a record 
covering every three months throughout the year of the per- 
centage of merits and demerits of each employee, "and no 
employee knows when he receives his check whether he is to 
receive one dollar or several hundred dollars." 

The annual cash distributions have increased yearly from 
$500 in 1902 to $6,115 in 1913, and have been made in 
addition to a salary increase for every employee during that 
period. There are about 25 employees. 

The president of the company considers the plan an un- 
qualified success. 

(1919) Russel L. Tracy, president, December 30: 

4 We still firmly believe in the wisdom of the individual 
merit plan of profit sharing, as explained in our former com- 
munication to you, and while this plan requires a closer obser- 
vation by the president or manager of the work of each em- 
ployee, yet we feel it develops individual initiative, enthu- 
siasm and ambition much more than the step-by-step plan or 
any plan by which all of the employees, regardless of in- 
dividual effort, profit in equal proportion if the business of 
the company is prosperous. 

'We have about 30 employees and the plan applies to all 
excepting the president, the vice-president and all of the em- 
ployees to the youngest typist sharing in the profits. Some- 
times some of the employees who did not receive as much as 
they felt was due them have felt the president was mistaken 
in his estimate of their worth, but I am sure the heads of all 
of the departments believe in and approve of the plan, and 
we are more and more impressed with the justice of it and 
consider that profit sharing with employees is the last and 
most valuable step ever taken to modify and eliminate trouble 



PROFIT SHARING REPORT 179 

between capital and labor, and unless the banks and financial 
institutions recognize the rights of the employees to such an 
extent that they consider and watch their interests and actually 
perform the work of a walking delegate it will not be long 
before the clerks, stenographers and typists will be organized 
into a union and then demand, through their own walking 
delegates, more than they or their employees now think pos- 
sible." 

Turner Construction Company. 

NEW YORK. 

(1919) H. C. Turner, president, December 11: 
'We have what we call an 'additional compensation plan,' 
which applies to our office staff, including officers and heads 
of departments, under which in addition to receiving fixed 
salaries additional compensation is made payable to officers, 
heads of departments and employees of the office staff, based 
upon length of service, responsibility of position, character 
of work done and net profits. We also have a plan for addi- 
tional compensation for superintendents and foremen on our 
construction jobs — likewise based upon length of service and 
efficiency with which the work coming under the individual 
direction of the superintendent and foremen may be done. 
All of these plans, however, are quite different from any 
general profit sharing plan which might be applied by cor- 
porations or firms to their employees generally. 

''We have never established any system of profit sharing 
with our employees generally; that is, to include our work- 
men on our construction jobs. The problem of the construc- 
tion company, where the character and location of the work 
is constantly shifting, and likewise a constantly shifting group 
of employees due to working first in one part of a city and 
then in another part or in outside towns and cities, differs 
from that of the manufacturer who has an established base 
of operation with a fairly steady group of workmen. Fur- 
ther, in building construction in this part of the country, the 
great bulk of the workmen are employed in accordance with 
terms of employment, including wages, established through 
trade agreements between employers' associations and labor 
unions. 



180 THE NATIONAL CIVIC FEDERATION 

'We regard our 'additional compensation plans,' as they 
have been applied during the past nine years, a success." 

Tweedy Silk Mills, Inc. 
danbury, conn. 1914. 

(1916) A share in the profits, not determined in ad- 
vance but varying according to net earnings from year to 
year, is distributed among the employees in proportion to 
their annual wages. The rate of this dividend on wages has 
been 10% during the two years since the plan was put in 
operation. The distribution affects all employees, including 
heads of departments. 

(1919) E. T. Hoyt, treasurer, October 9: 
'We have not had a profit sharing plan since 1916 as it 
did not prove satisfactory." 

United Paperboard Company. 

NEW YORK. 

(1919) Sidney Mitchell, president, November 13: 
'We have tried profit sharing at various mills at various 
times. We have about 1,500 employees. Profit sharing has 
been the means of modifying a tendency toward labor troubles 
only when the profits are good. We have had it for heads of 
departments and have had it include the rank and file. We 
think it a failure; it only works one way. When profits de- 
cline, everybody is dissatisfied. Employees only seem to 
wish to be partners during prosperity. 

"Our stock ownership plans have failed for lack of inter- 
est on the part of employees. Special distributions to heads 
of departments, I believe, have been beneficial. Our only 
successful plan so far has been bonus per ton of increased 
product of good quality, and this has a tendency to increase 
the man power. Personally, I feel that this bonus, with a 
similar bonus for efficiency production per hour per man, 
would be the best plan and one that we are figuring on." 



profit sharing report 181 

The United States Playing Card Company. 

cincinnati, ohio. 

(1919) John Omwake, president, November 28: 

"The premium plan was started in our company about 
ten years ago, first in one department, then another, until it 
took in all departments and now covers about 900 employees 
and amounts to 15% of the payroll annually. An average 
of several years' output of a department was taken as a basis 
of production for the weekly wage. A sliding scale premium, 
payable weekly, is paid for an increase over this production, 
the entire production to be of satisfactory quality. The basis 
for computing the premium, and the amount of premium, 
have been changed from time to time to meet changing con- 
ditions. Generally the amount of premium to be earned has 
been increased. 

"We employ about 300 men and 600 girls. The feeling 
toward the plan is good and it benefits all our employees. 
The printing departments are union and do not participate 
in the premium. All other departments do. The foreman 
earns a premium on the total premium earned in his depart- 
ment. We regard the system a success and would not dis- 
continue it. We have had no strikes." 

Vonnegut Hardware Company, 
indianapolis. 

(1919) P. Vonnegut, November 21: 

'We began in 1910 to pay a bonus, which has varied 
from 5% to 10% on salary earned. (One year 15%.) 
Number of employees now, 190. Little variation throughout 
the year. Feeling toward the plan, kindly. All but a few 
truly appreciative. Some (not openly) grumble, we learn. 
One, an old clerk, asked outright: "How do I know that this 
is a fair share?' 5 He is still on the payroll. 

''We are dealers and our labor troubles are different 
from those of the manufacturer. The war has spoiled boys 
and young men. They are not satisfied with wages commen- 
surate with ability. We have difficulty in finding boys wil- 
ling to begin at the bottom. Since May 24 forty-three young 



182 THE NATIONAL CIVIC FEDERATION 

men and boys have come in and gone again. High school 
graduates are not looking for jobs; they want positions. 

"The bonus is paid to all who have been in the employ 
of the company for twelve months or more." 

Washburn-Crosby Company, 
flour millers. minneapolis, minn. 1914. 

(1916) The company gives those employees who have 
been in its service for one year a check for $25 to start an 
account in a savings bank. At the end of the following year 
the company gives a check not exceeding $25, equivalent to 
half the net increase in the employee's bank balance in excess 
of the original $25. 

About 625 men were eligible when the plan was intro- 
duced, and the company states that "a great many men 
started savings accounts with the $25 and have continued to 
put additional funds in the bank since receiving the special 
checks. . . . Our whole desire is to encourage in a sub- 
stantial manner those men who are efficient, loyal, respons- 
ible, and by their good work help to build our company 
along honorable, fair-minded and straight-forward lines." 

(1919) F. G. Atkinson, vice-president, September 9: 

"One of our largest competitors in years gone by inaugu- 
rated a profit sharing plan with his employees. Many diffi- 
culties arose, however, and the plan was finally dropped, not 
having proved successful, this largely owing to material vari- 
ation in profits. The experience of our competitors deterred 
us from going into a similar scheme. 

"In p]ace of profit sharing, however, we have always paid 
the highest wages paid by any flour milling company in the 
world. Hence, for several decades, there has been no trouble 
in our plants. During the war we saw something was neces- 
sary in order to bring our men closer to us; hence we have es- 
tablished a working agreement with our employees, which so 
far has worked very satisfactorily. We also for years past 
have carried on in the plant what is known as the Washburn 
Mills Insurance Association. In addition, we have recently 
taken out group insurance covering everybody connected with 
the company, from the president down to the office boy, and 
the general superintendent at the mills down to the roughest 



PROFIT SHARING REPORT 183 

kind of labor. A person, to enjoy this group insurance, 
must be in our employ three months, at which time his bene- 
ficiaries are protected up to $500. There is a graduated 
scale of benefits based on time of service up to two years, 
where the maximum amount is reached of $2,000. Another 
feature we have introduced in lieu of profit sharing is the 
guaranteeing of all employees, who have been in our service 
three years or over three hundred working days in the year. 
All employees in good standing whether they work or not 
come in under that guarantee." (Pamphlets.) 

Weinstock, Lubin & Co. 

MERCANTILE ESTABLISHMENT. SACRAMENTO, CAL. 

(1916) During the past twenty-five years or more the 
buyers or heads of departments in this store have been paid 
a dividend out of the net earnings of their several depart- 
ments. It is based wholly upon the net profit of the depart- 
ment and not upon wages or length of service. The company 
considers it a successful method for enlisting the best efforts 
of the department heads, of whom there are about twenty. 

Western Wheeled Scraper Company, 
aurora, ill. 1911. 

(1916) It is the policy of the company, when it has a 
prosperous year, earning a fair dividend for the stockholders, 
to make a distribution among all the employees who have 
been on the pay roll for a year or more, from the president 
down to the least important laborer, aggregating about 850 
employees. 

Three per cent on the annual salary of each employee 
was paid during the years 1911, 1912 and 1913. No dis- 
tribution was made in 1914. 

The company states: 4 We believe this distribution has 
helped to keep our employees on the roll permanently and 
prevented the frequent transfers of people among different 
manufacturers in this territory. Our employees are able to 
judge whether the volume of business is sufficient to earn 
dividends for the stockholders so that there was apparently 
no ill feeling when we were obliged to omit the distribution 



184 THE NATIONAL CIVIC FEDERATION 

in 1914 and do not expect that there will be this year (1915). 
On the whole, we are quite well satisfied with the results of 
this plan up to this time." 

(1919) W. J. Bobb, president, December 1: 
"The company has been in active business since 1877 and 
has never had any serious trouble with its employees and 
never any strikes. We employ between 600 and 700 men 
and have an open shop. We have no profit sharing plans 
except at the end of each year we have given all our em- 
ployees 3% of their wages or salary, provided they have 
been in our employ for at least one year. This is in addition 
to their wages and salary as a reward for continuous service 
and has been in force for the last fifteen years. Our aim is 
to treat our employees well and pay them as high wages as 
other employees receive in like service in this section of the 
country and to arrange so that they can have steady work 
for the year. 

4 We encourage our men to save their wages and to own 
their own homes. Our experience is that the above method 
is the wisest and best where the number of employees is not 
too large to keep in personal touch with the men. I might 
add we aim to make all promotions from among our own 
men rather than to bring in new men from the outside for 
the more important positions." 

Whitaker-Glessner Company, 
open hearth steel. wheeling, w. va. 

(1919) Alex. Glass, chairman, November 19: 
"In 1918 we introduced a profit sharing plan which was 
participated in by foremen, heads of departments and execu- 
tives, 230 in all. We believe it has stimulated effort, created 
a better feeling and allayed some of the unrest that previ- 
ously existed. The amount set aside for profit sharing is de- 
termined by the executive committee and is based on earn- 
ings. In making the distribution salary, length of service 
and general efficiency of the individual is taken into consid- 
eration." 



PROFIT SHARING REPORT 185 

H. 0. Wilbur & Sons. 

MANUFACTURERS OF CHOCOLATE AND COCOA. PHILADELPHIA, 

PA. 

(1919) From a representative of the firm, November 
15: 

"We haven't any definite profit sharing plan, although 
for years it has been our practice to declare a wage bonus 
to all employees based on a percentage of their actaul earn- 
ings during the year. These wage bonuses have run in per- 
centage from 10% to 23% of the yearly wages. As far as 
we know the result has been satisfactory." 

Williams Foundry and Machine Company, 
akron, ohio. 1912. 

(1916) An appropriation is made each year for the 
purpose of paying a bonus to the employees. It is not a fixed 
percentage of the profits but a sum determined by the man- 
agement according to what it believes can be afforded. At 
the last distribution in 1915, the sum of $2,200 was divided, 
partly to those who had been with the company more than 
thirteen months, in proportion to length of service, and partly 
according to the number of hours worked during the preced- 
ing year, irrespective of earnings. Salaried foremen did not 
share in this distribution, but in 1915 they were given a cash 
present of $40 each. 

(1919) F. E. Holcomb, president, October 9: 
'This company was organized in October, 1917, and 
since that time we have had no regular profit sharing plan. 
We place an extra compensation upon production, the same as 
heretofore. As for our opinion concerning same, we would 
hesitate to express it favorably inasmuch as the machinists 
of this city have been on a strike for the past seven weeks, 
with no cause whatever other than an attack of the fever 
which seems to be spreading all over the country." 

Wire Wheel Corporation of America. 

buffalo, n. y. 

(1919) F. L. Rowe, treasurer, October 13: 

'The Wire Wheel Corporation of America purchased the 



186 THE NATIONAL CIVIC FEDERATION 

interests of the Houk Manufacturing Company in the early 
part of 1917. The late Mr. Houk had offered his employees 
a certain bonus to be paid at the end of 1917. This arrange- 
ment was carried out by the Wire Wheel Corporation and 
payment made to employees entitled to receive the bonus, at 
which time we notified all of our employees to the effect that 
the arrangement would be discontinued. 

"In lieu of this bonus system, we presented each of our 
employees who had been in our employ three months prior 
to December, 1916, a life insurance certificate in the amount 
of $1,000. The premium covering this certificate is paid by 
the corporation. We also present each of our new employees 
with a life insurance certificate upon completion of three 
months' employment. This is the only welfare work that 
is carried on at the present time." 

"The employees seem to be very well pleased with the 
fact that their lives are insured and that in case of death their 
widows or families are protected in the amount of SI, 000. 
We make payment of the full sum as soon as the insurance 
company is satisfied that all necessary papers have been prop- 
erly recorded." 

H. R. Wyllie China Company. 

HUNTINGTON, W. VA. 

H. R. Wyllie, president, November 12: 

"I have not adopted any profit sharing plan among my 
employees, due to the fact that pottery workers have always 
been strongly organized and have been among the best paid 
employees in the country. Also, I operate almost entirely 
on a piece work basis. The only profit sharing or bonus plan 
that I have used is with the heads of my departments. That 
is, including office manager, sales manager and superinten- 
dent. My experience along the lines mentioned, has been a 



success." 



Yale and Towne Manufacturing Company, 
hardware. stamford, conn. 

(1916) A limited number of those holding responsible 
positions in the organization for a number of years received, 



PROFIT SHARING REPORT 187 

in addition to their stated salaries, a certain share of the 
profits in excess of interest on invested capital. 

This plan, although regarded as a success, was discon- 
tinued because it was concluded that it would be better to 
have those men acquire stock holdings in the company, and 
this investment arrangement was put into operation in 1914. 
The stock is offered to them below the market price. This is 
regarded as a wise means of interesting more deeply in their 
work the heads of departments, to whom it is limited, not 
only for their own selfish ends but because it will bring about 
better results for the corporation as an entity. 

Many years ago, the company adopted a system called by 
it gain sharing, under which certain groups of employees 
participated in the reduction of costs as they were effected 
(described in paper by Henry R. Towne, the President, on 
"Gain Sharing," in Vol. X, of the "Proceedings of the 
American Society of Mechanical Engineers," 1889). The 
plan was used successfully for several years but was re- 
placed by methods of piece-work, or the Taylor system of 
scientific management, under which the workmen were re- 
warded for increased efficiency by increased compensation, 
according to the company's statement. 

On March 3, 1916, the company announced that more 
than $35,000 would be paid to the workmen in bonuses 
March 15, and a similar distribution in April. There are 
5,500 employees at the local plant, to be affected by this 
distribution. This has no connection with the Taylor system 
of payment but is a gratuity or gift due to unusual conditions 
in the labor market. 

(1919) John B. Milliken, treasurer, December 27: ■ 
"We have no profit sharing plan in effect at the present 
time. We had such a plan, applying to a very limited num- 
ber of our more responsible employees, but discontinued it 
some years ago and have not since that time had any such 
plan in operation. Upon the discontinuance of the plan, the 
employees mentioned and a few others were given the oppor- 
tunity to subscribe for substantial amounts of capital stock 
of the company upon very liberal terms, and our experience 
since that time has indicated that the move was a wise one." 



188 THE NATIONAL CIVIC FEDERATION 



PRODUCTION BONUS. 

What, judging from their reports, some employers regard 
as a legitimate subdivision of profit sharing is a production 
bonus. This is a possibility in manufacturing establishments 
in which the management can compare actual production by 
a given force in equal periods. This seems to be an increas- 
ingly favorite method of addition and division. In some 
branches of manufacture a measurement of the production 
can be applied by the employees themselves. There is in this 
case no need of going into such matters as bookkeeping, 
state of the market or other factors of management. 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. 
A date in a sub-heading indicates the vear in which the 
experiment under notice began.] 

American Locomotive Company. 

NEW YORK. 

(1919) Andrew Fletcher, president, November 10: 
4 We have no profit sharing system in our company. I am 
frank to say that I do not believe in it for the ordinary work- 
ingmen or mechanics such as we employ. I, personally, be- 
lieve that it is better to give them good weekly wages so that 
they will get their money or profit for their work every week. 
I do, however, believe in a bonus system based on tonnage or 
production for the producing heads of the various plants and 
for the executives of the company. 

"'Under the system that we have worked, that is to say, 
first class wages for our workmen and a bonus system for the 
heads of the various departments based on tonnage (which 
system we had working last year) we were enabled to produce 
the greatest tonnage in the history of the company notwith- 
standing the more or less scarcity of help and our not work- 
ing to full capacity of our plants because of lack of labor." 



PROFIT SHARING REPORT 189 

The H. Black Company. 

COATS, SUITS, SKIRTS. CLEVELAND. 

(1919) Hugh Fullerton, November 12: 

"We have no profit sharing plans in operation in our fac- 
tory, save only an efficiency payment which is based on the 
productive work of each individual. We price our merchan- 
dise on an estimated standard of production, and the worker 
who exceeds the standard pays an increased profit on his 
labor. We split that profit with him at that point." 

Citizens' Trust Company, 
utica, N. Y. 

(1916) At the end of each year the employees are paid 
a bonus on their annual salaries, the rate depending upon 
the amount of net earnings for the season. When the earn- 
ings are from $50,000 to $60,000 the bonus is 5% on sal- 
aries, and the rate increases by 1% for each additional 
$10,000 of earnings, the maximum being 10% when the 
year's business yields $100,000 or more. 

The employees do not know until the year is over what 
the bonus rate is to be, and the company finds that this serves 
as an incentive to get in new business and increase the net 
profits of the bank, with very satisfactory results. 

(1919) The special distribution or bonus plan of this 
company was based upon an effort to make the distribution 
of the profits in accordance with the earnings. In actual 
practice, however, it worked out as a straight bonus of 10%. 
This year a change was made in the method of computation 
on the theory that the employees receive their full compen- 
sation for the work in the payroll; deduction of an amount 
equal to 6% of the capital and surplus (before deduction of 
dividends) provides for the wages of capital. It was felt 
that in the banking business at least 50% of the profits should 
go to the surplus, and that the other 50% might be divided 
between "capital" and "labor," so that 25% of the balance 
of the fund is set aside as a profit sharing fund. This 25% 
is distributed to all members of the staff, officers and em- 
ployees alike, on the basis of their salary received by them 
during the current year. In the event, however, that the 



190 THE NATIONAL CIVIC FEDERATION 

amount is insufficient to pay all alike in the sum of 10%, the 
elected officers do not share until the others have received at 
least 10% of their annual regular compensation. This profit 
sharing plan simply means that of each dollar of extra earn- 
ings that is made for the company or each dollar that is saved 
for the company the members of the staff receive 25 cents. 

Consolidated Gas Company of New Jersey, 
long branch, n. j. 1911-1914. 

(1916) The plan applied to the water gas makers. It 
consisted of a monthly cash payment and was based on the 
results obtained in the operation of the water gas machines. 
Three items were considered — the quality of coal used, the 
quantity of oil required and the time per unit of gas made of 
standard quality. 

This is a bonus plan and not profit sharing. It is inter- 
esting in indicating how there may be a proper adjustment of 
piece-work rates in this industry. 

The company states that the system was very satisfactory 
for some time and that the results obtained through it were 
wonderful. 

"We regard it as having been a great success. At the 
time it was inaugurated the standard was low. The men 
on the machine did not know what results could be ob- 
tained and were satisfied with those they were getting. 
They are of a class of men who take pride in doing good 
work and all that was required was to get them started 
along the right track, and that certainly has been accom- 
plished by the bonus system. It is now nearly a year since 
we abandoned the bonus system and we have seen no no- 
ticeable falling off in the results. We are paying the men 
a much higher wage than formerly, in fact a very much 
higher wage than is prevalent among men of that grade 
in this section of the country. We did this because we 
felt that the men would be apt to go back and lose the 
incentive that they formerly had if the bonus was removed 
and nothing was done to make up for it. 

"We contemplate a bonus similar to this in other de- 
partments. We do not plan on making it permanent but 
will announce it as a temporary bonus to be paid for a 
period of one year or so, and if at the end of the initial 
period it has not served its purpose it may be extended. 
If it has served its purpose and we are satisfied with the 



as 



PROFIT SHARING REPORT 191 

results we will discontinue it but pay the men a wage in 
keeping with their increased efficiency." 

The company states the reasons for abandoning the plan 
follows: 

"The system was abandoned for several reasons, princi- 
pally because the bonus grew to such an extent that it was 
causing dissatisfaction among all the men in our employ 
who were not receiving a share of it. The gas makers 
were drawing larger wages than the foremen and some of 
the superintendents who supposedly had very much better 
positions with the company. 

"Another reason was that the gas meter which meas- 
ured the output and upon which the bonus was based got 
out of order and for a while it was necessary to estimate 
our output. This made the computation of the bonus a 
very difficult if not altogether an impossible thing. 

"Another reason for abandoning it was that the re- 
sults were not dependent altogether upon the efforts of the 
men themselves, the quality of materials furnished, weath- 
er conditions and various other items over which they had 
no control playing at times a more important part than 
the men themselves. 

Curtis, Towle & Paine Company 

woodwork. lincoln, neb. 

(1919) C. B. Towle, vice-president, November 21: 
'We do not operate any regular profit sharing plan. We 
are, however, putting into effect the Leitch plan, which pro- 
vides for payment to the men of half of the savings due to 
economies and decreased overhead which in our opinion is 
preferable to any straight profit sharing. About 250 em- 
ployees will participate. The date of instalation was Novem- 
ber 1, 1919. This includes every one in the organization 
except the executive officers. It has not been in operation 
sufficiently long for us to pass upon its success." 

FOLLANSBEE BROTHERS COMPANY. 
PITTSBURGH. 

(1919) William U. Follansbee, president, Novem- 
ber 17: 

'This company was incorporated in 1894 and succeeded 



192 THE NATIONAL CIVIC FEDERATION 

to an old established business, which the writer entered as- 
an invoice clerk 40 years ago at a wage of $6 per week. The 
present plant is located at the town of Follansbee, Brooke 
County, West Virginia, and consists of open hearth steel fur- 
naces, sheet steel and tin plate mills. The sales exceed $10,- 
000,000 per annum to about 6,000 customers scattered over 
a large portion of this country, with a number in foreign 
countries. Branch offices and warehouses are conducted in 
principal cities and the total number of employees aggregates 
about 1,400. 

"We consider what we are doing is primarily 'additional 
compensation.' It becomes applicable only after a fixed 
volume of earnings is shown stockholders by cash dividends 
and additions to surplus. This additional compensation, be- 
ginning with the president of the company, is given only to 
'experienced and trained executives, heads of departments, 
superintendents, foremen, especially efficient workmen, 
branch managers, etc' The plan was initiated in 1910 and 33 
participated. It has continued up to the present time, the 
maximum number, 65, participating in 1917. Because of the 
combined condition of considerably decreased profits at the 
time of materially increased salaries for the year 1918, the 
number participating was reduced to 20. 

'The plan has proved an unqualified success in maintain- 
ing a high morale among heads of departments, superin- 
tendents, foremen, etc. It is this factor which we are fully 
assured is the prime essential to the entire question of labor 
troubles. We are sure the greater proportion of labor 
troubles are occasioned by 'management.' 

"In support of our opinion and experience, we may 
advise we have never had a strike. During the recent 'an- 
archy' in the steel business, our plant has operated 100% 
and the production during the month of October was next to 
the highest in our history. This notwithstanding the fact 
that immediately across the Ohio River the United States 
Steel Corporation's plant at Mingo, Ohio and the LaBelle 
Iron Works plant at Steubenville, Ohio, have not turned a 
wheel since September 22, as is also the case with the LaBelle 
Iron Works plant immediately adjoining the town of Follans- 
bee, while at other industrial towns a few miles from our 
location the plants have either been shut down entirelv or 



PROFIT SHARING REPORT 193 

have operated to a limited extent through the protection af- 
forded by state constabulary, etc. 

"We attribute our freedom from labor troubles to the 
following: To an ideal manufacturing town, paved and 
sewered streets, water and natural gas facilities, seven 
churches, three exceptional school buildings with an addi- 
tional one projected for the coming year, public playgrounds 
and bathing beach, with, the most influential factor, never a 
saloon in the town of Follansbee, this notwithstanding our 
plant was in operation for many years prior to the state be- 
coming dry. With a population of 3,000 the town has re- 
quired but one policeman. 

"The homes are of an exceptional character and as a 
rule owned by the occupants. By the easy payment plan 
of 10% a month as conducted by the company the employees 
subscribed and have almost finished paying for $900,000 
government bonds. Our timekeeper states that practically all 
employees who voluntarily leave, taking positions elsewhere, 
return and seek their old jobs with the company. 

"It is the policy of the company in every way to avoid 
paternalism. The town government is practically in the 
hands of the workingmen. Full consideration is given to 
advantageous working conditions such as fresh water through- 
out the plant, water cooled standings and cool air piping 
system to relieve the heat of summer, etc. 

4 The plant has always operated under the union scale 
of the Amalgamated Association of Iron, Steel and Tin 
Workers, which has covered about one-half of the employees, 
the other half being non-union. Union men have always 
lived up to their agreements with us in every particular. 

"We have taken the liberty of giving this rather lengthy 
outline, because we believe a great deal of the present labor 
unrest has been occasioned by too much talk, particularly on 
the part of college professors, preachers, politicians, and other 
theorists who have had no experience and know little or noth- 
ing respecting the handling of men. 

'We do not believe in any distribution of profits, stock 
ownership plans or participation in management on the part 
of the men, and we do not believe the true American work- 
man is speaking for any of these features. What he is after 
is reasonably steady employment, a fair wage, fair hours and 



194 THE NATIONAL CIVIC FEDERATION 

good living conditions. In our opinion there is absolutely 
nothing to the entire labor problem than the principle of the 
square deal participated in by both management and work- 
men. 

"The best mention we have seen, and with which we 
wholly agree, has come from Mr. Dorr E. Felt, a large manu- 
facturer employing hundreds of men, as covered by the 
pamphlet "College Made Utopias and Labor Unrest.' " 

Garfield Worsted Mills, 
garfield, n. j. 

(1919) Wm. M. Kennard, November 15: 
"The management has for some time past followed the 
bonus system, this seeming in their judgment to be the best 
adopted to the conditions under which the mill operates. The 
employees are largely of the foreign element and float about 
quite a little, and the bonus system admits of recompensing 
them under these conditions, probably better than the profit- 
sharing system would." 

Grand Rapids Veneer Works, 
grand rapids, mich. 

(1919) Thomas D. Perry, vice-president and manager, 
November 24: 

"We have 205 employees, of whom 170 are in our fac- 
tory. We have a bonus plan effective in the factory, the basis 
of which is to give to the employees any excess earnings they 
produce; i. e., if a man can build, glue and cut 1,000 square 
feet normally in nine hours, receiving 40 cents per hour, or 
$3.60 a day, and he should increase this amount to 1,500 
square feet in a day of nine hours, we would give him a bonus 
of $1.80 for the day. 

"At the present time we confess that the impetus imparted 
to the men by this plan is not sufficient to make it very at- 
tractive. We think it is largely because we have not used the 
method long enough to know the differentials required in the 
different lines of work we produce. We believe our endeav- 
ors to give the men this bonus are producing a better feeling 
between the employer and the employee. 



PROFIT SHARING REPORT 195 

"We have another profit sharing method applied to the 
department heads, whereby a certain sum over and above the 
running expenses, depreciations, and 7% on invested capi- 
tal is divided in two funds, one for the stockholders and 
one for the department heads, and this is divided at the end 
of the year in the ratio of the salary of the department heads. 
This latter scheme is a success." 

Hammond Typewriter Company. 

NEW YORK. 

(1916) For some years prior to the European war the 
company paid each employee a quarterly gratuity, the amount 
of which was based on length of service: for three months' 
service 50% of one week's salary, for six months' service 
55%, increasing at the rate of 5% for each additional three 
months' service up to five years, when an employee received 
the equivalent of a full week's salary. 

In describing the plan the company states that these 
gratuities were colloquially called "dividends" and were 
paid whether the company made a profit or not, "and so 
actually they were not profit shares at all." 

Regarding the success of the plan the company says: 

"About the only difficulty we had with the system was 
that many of the employees ceased to regard the payments 
as gratuities and thought of them as vested rights, with the 
result that they resented the suspension of the payments. If 
the payments had been suspended at any time other than in 
a business crisis, we are inclined to believe that there would 
have been troublesome dissatisfaction. In other words, the 
payments so completely lacked the character of actual profit 
sharing that in the eyes of the employees the fact that the 
company was making no profits would not have been regarded 
by the employees as a sufficient reason for suspending any 
payment." 

In consequence of the shutting off of export business by 
the European war, the company has temporarily suspended 
these gratuities, but expects to resume them when business 
warrants. 

(1919) N. D. Becker, president, October 4: 

"Our special distribution plan, described by you in 1916, 
was discontinued about five years ago and has not been re- 



196 THE NATIONAL CIVIC FEDERATION 

sumed. We have not yet substituted any other similar plan 
applicable to the whole business, but have been working along 
the lines of rewarding increased efficiency by a division of the 
cost of manufacture saved. For example: A certain unit was 
being manufactured at a labor cost of 33 cents apiece. We 
agreed with the workers in the department that if they by in- 
creased efficiency would reduce the cost of manufacture the 
company would divide the saving with them half and half. 
The result has been that the labor cost per unit has fallen to 
23 cents, and the earnings of the employees in the department 
have been substantially increased. 

'We are endeavoring to apply this principle in all the 
departments of our factory as fast as it is applicable. The 
result of our experience with the former system of out-and- 
out bonus and with the present system of making the em- 
ployee earn his increased reward by increased efficiency has 
been to convince us that the straight bonus plan is a failure, 
whereas the increased efficiency plan, as far as it is applic- 
able, is a success." 

The Seattle Times, 
seattle, wash. 

(1919) A. G. Bixby, assistant to the publishers, Octo- 
ber 1: 

"For some time the publisher of the Seattle 'Times' has 
intimated his desire to establish a profit sharing plan, if such 
a plan could be devised to fit the publishing business. We 
are a daily and Sunday newspaper, employing about 350 
persons all told, of which about one-half are members of 
organized labor. We are now paying over and above our 
contract wages what we call an efficiency dividend. This 
dividend, starting at 75 cents per day per man, in September, 
will be $1 per day per man during October, and may work 
up to $1.25 per day per man through November and Decem- 
ber, should business conditions and efficiency warrant if. 
Now, this plan merely cares for organized labor in those 
branches which particularly appertain to the getting out of 
the newspaper, and leaves our unorganized employees in a 
rather unenviable situation." 



profit sharing report 197 

Weir Frog Company, 
cincinnati. 

(1919) 0. De G. Vanderbilt, Jr., president, Novem- 
ber 11: 

"Our plan, which is still in force, was started August 3, 
1917. There were 225 employees in our employ at that time. 
This profit sharing plan is based on the monthly tonnage pro- 
duced. This tonnage is posted daily and accumulated monthly 
on a board in the shop, and the employees seem to have con- 
siderable interest in it, as they begin to get a percentage on 
their monthly wages as a bonus when the tonnage goes over 
a certain mark. It is like watching a baseball scoreboard. 
Formerly the employees never knew what the production of 
the shop was; now they know and can see daily, and they seem 
to be considerably interested in it, which is, of course, a good 
thing. 

'We have an open shop and have had no labor troubles, 
but we do not ascribe this to our profit sharing plan, but rather 
to the fact that we maintain personal contact with Our em- 
ployees and confer with them personally and individually at 
intervals and discuss openly with them all questions and try 
to treat them always fairly and openly. 

"Every employee in the company, from the janitor up, 
participates in this bonus system, with the exception of the 
executives, who are on a bonus dependent on the profits of the 
company. We believe this is successful enough to continue it." 



198 THE NATIONAL CIVIC FEDERATION 



STOCK OWNERSHIP PLANS. 

There are several types of plans for giving employees- 
also the status of stockholders through advantageous terms r 
offered them by the company by which they are employed. 
By one plan, the employees may obtain stock on instalments 
at less than the current market price, the company charging 
interest on unpaid balances and crediting dividends on the 
purchase account. By another plan, the employees receive 
a bonus if they do not sell the stock or leave the service of the 
company for a given term of years. By another, employees 
may pay partly in cash and partly through special credits 
accorded them by the company. By yet another plan, the 
employees make no payment, the stock being credited to their 
accounts and held for a prescribed time before it is given 
them outright. In the case of certain stock ownership plans, 
there is no actual profit distribution nor any expense incurred 
on the part of the company other than in the bookkeeping 
that records the receipts and credits of part payments. Types 
of the various plans follow: 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. 
A date in a sub-heading indicates the year in which the 
experiment under notice began.] 

American Light and Traction Company. 

(See Percentage of Profits.) 

American Sugar Refining Company. 

NEW YORK. 

(1919) The company reports that its stock purchasing- 
plan was inaugurated January 1, 1919. Partial payments 
may be made in amounts of $5 or multiples thereof for each 
share. Full payment for five shares of stock or less must be 
made within two years after application, for more than five 
shares within three years. 



profit sharing report 199 

American Telephone and Telegraph Company. 

NEW YORK. 1915. 

(1916) Shares of stock of the company are sold at 
10 per share to any employee who has been for two years 
in the service of the company or of any subsidiary company 
which accepts the plan. Employees may purchase one share 
for each $300 of wages, but in no case may they purchase 
more than ten shares. Payments must be made at the rate 
of $2 per share per month, which is deducted from wages. 
Interest at 4% is charged on unpaid balances, while the divi- 
dends (which have averaged 8%) are credited as payments 
on the stock. 

No employee may alienate or pledge his stock until it is 
fully paid for. If one leaves the company's employ his pur- 
chase-agreement is cancelled and the net amount paid in is 
returned; provided that if he leaves after March 1, 1917, he 
may, if he chooses, pay the balance due on his stock and take 
it up. The same course is followed with respect to the heirs 
of employees who die in the company's service. . 

Over 30,000 employees have purchased and are paying 
for more than 100,000 shares of stock. 

(1919) J. D. Ellsworth, September 20: 

"Our stock ownership plan remains in force. There are 
about 13,000 employees who are paying for their allotment 
of stock in easy payments, and about 22,000 stockholders 
who have obtained their stock by this method. We have no 
means of knowing whether all those who obtained their stock 
by this method are still employees, but it is safe to say that 
there are approximately 35,000 employees who at the be- 
ginning of the year either had paid up for their stock or were 
paying up for it in accordance with this plan." 

Atlas Powder Company, 
explosives. wilmington, del. 1913. 

(1916) Employees who have been in the service of the 
company at least two years who contribute in an unusual de- 
gree to the welfare of the company by their inventions, ability, 
industry or loyalty, and whom, in the opinion of the direct- 
ors, it is desirable to have interested in the business as stock- 



200 THE NATIONAL CIVIC FEDERATION 

holders, are granted a bonus consisting of stock of the com- 
pany, the amount of which is determined by the directors and 
shall not in any one year be greater than one-half of the an- 
nual salary of the employee to whom the award is made. The 
certificate for the number of shares thus allotted is not de- 
livered to the employee but is held by the bonus trustee to- 
gether with a power of attorney transferring the employee's 
interest in the stock of the company. The certificate and 
power of attorney are held for six years, at the expiration of 
which time the stock is delivered to the employee and the 
power of attorney cancelled. If the employee leaves or is 
dismissd from the service of the company, he is entitled to 
receive only that proportion of the stock which the elapsed 
portion of the six years bears to the full period of six years, 
and the proportion which the employee is entitled to receive 
may be purchased by the company at par. Beneficiaries re- 
ceive all dividends declared on the stock allotted to them. 

In addition to the stock distribution, employees who do 
their work in a careful, workmanlike and satisfactorv man- 
ner, obey orders and carefully observe the rules and who have- 
been in the continual service for at least two years, receive a 
monthly cash payment in addition to wages, as follows: Con- 
tinuous service for two years, 5% of regular pay; for five- 
years, 10%; for ten years, 15%; for fifteen years, 20%. 

There is also a stock subscription plan, adopted in 1915. 
Employees may subscribe for stock of the company at par,, 
the total amount of the subscription depending upon their 
salaries, i. e., employees receiving an annual salary of $1,000^ 
or less, 20% of salary; over $1,000 and not over $2,000, 
15%; over $2,000 and not over $5,000, 10%; over $5,000, 
8%. Stock may be paid for outright or in monthly instal- 
ments at not less than $2 per share per month, deducted from 
salaries or wages. Subscribers receive all dividends and are 
charged 5% on unpaid balances. Employees who have paid 
for their stock and who retain it and remain in the company's 
employ, will receive a bonus of $2 per share for five years. 

In 1913, 87 employees were stockholders, constituting 
11.5% of the total number of stockholders, and in 1914, 173 
employees held stock, constituting 21.5% of the total number 
of stockholders. 



PROFIT SHARING REPORT 201 

(1919) The company's assistant treasurer reports, Sep- 
tember 16: 

"This company has in effect at this time the following 
beneficiary or profit sharing schemes: Bonus plan, service 
wage plan, pension plan, stock subscription plan for the year 
1919. 

"With regard to the bonus plan, out of approximately 
2,500 employees on the salary roll and payroll of the com- 
pany during the latter part of 1918, 295, or approximately 
11.80%, participated in the awards for results accomplished 
over the year 1918. The service wage, pension and stock 
subscription plans are, we think, self explanatory, and need 
no special comment. 

"In addition to the above mentioned schemes, there is be- 
ing paid to salaried employees, the following rates of emer- 
gency pay: 

35% on the first $100 flat salary or fraction. 
30% on the second $100 flat salary or fraction. 
25% on the third $100 flat salary or fraction. 
22% on that portion of flat salary in excess of $300. 

"For example, an employee with a flat salary of $350 per 
month is receiving in addition an amount of $101 'emer- 
gency pay,' or a total compensation of $451 per month. We 
might state that this 'emergency pay' is strictly an emergency 
provision and is subject to discontinuance by the board of 
directors in whole or in part at any time. 

'With regard to the payroll employees, at some points 
an adjustment has been made in wage rates and the emer- 
gency pay discontinued; at other points the emergency rates 
have been scaled slightly downward, and at others it still 
applies. 

"It is the feeling of the officers of this company that its 
beneficiary or profit sharing schemes have had the effect of 
increasing materially the efficiency of its employees and that 
they have been influential in establishing harmonious rela- 
tions to a very gratifying extent as regards both company and 
employees." 

The company issues booklets describing its plans. 



202 the national civic federation 

Baker Manufacturing Company. 

windmills, pumps, cylinders, tanks, gasoline engines, 
feed grinders, pump jacks. evansville, wis. 1899. 

(1916) The net profits of the company, after certain 
specified payments are made therefrom, are divided between 
the preferred stock and the "honorary" employees in the 
proportion that 5% on said stock bears to the wages of the 
employees. The honorary employees are those who have 
been in the service of the company 4,500 hours during 100 
consecutive weeks. They are supposed to receive the pre- 
vailing rates of wages as a partial remuneration, and the 
extra payment out of profits is termed the "remaining wage." 

The sum available for this extra payment to preferred 
stock and honorary employees is whatever remains of the net 
profits after a 5% dividend has been paid on both pre- 
ferred and common stock, §5 paid into a stock purchasing 
fund for every share of stock on deposit with the company, 
and 10% of the balance added to the sinking fund. The 
company agrees to purchase an employee's stock whenever 
the owner requests it if there is money in the stock purchas- 
ing fund to purchase with. The distribution to employees 
is 90% in common stock and 10% in cash. The company 
requires all employees to deposit their common stock with it, 
giving the company the first opportunity of purchasing should 
they want to sell, as well as the right to purchase the stock 
at the market price if the owner enters the employ of a com- 
petitor. 

The president of the company states: 

"In establishing profit sharing, it was our idea first to 
return to capital substantially the same earnings that past 
experience had shown it could earn, and to offer to em- 
ployees the increase in earnings that they could effect. 

"A 10% increase in the output of employees is more 
than a 10% increased earning, as the fixed charge does not 
increase in proportion to the output of the employees. An 
employee who is using his head to increase his production 
in every way possible, as a rule, requires little or no addi- 
tional room to work in and less of a foreman's time. In 
other words, an employee who is interested is producing 
more with less overhead and he brings the overhead per- 
centage down. This results in a larger increase in earning 
than in actual production. 



PROFIT SHARING REPORT 203 

"Another point in favor of profit sharing is that it 
makes capital much more secure. It is an almost positive 
preventive of strikes. It increases the' length of time that 
a man will stay in your employ and, as a rule, his effi- 
ciency increases with his years of service, and it certainly 
lessens the ill-will between the management and employees 
and between the foremen and employees. 

"Of course, we do not regard our plan as unqualifiedly 
a success but it has operated, in most respects, satisfac- 
torily." 

In May, 1914, the company employed 119 men, 70% of 
whom are stockholders. During the past sixteen years the 
company states that the plan has resulted in adding from 
28% to 120% to the wages of the stockholding employees. 

(1919) John S. Baker, president, September 4: 
'The stock ownership plan described in 1916 is still in 
force, with good results. Of the 150 employees of this com- 
pany, about 100 participate. Their feeling toward it is good. 
There have been no labor troubles. The plan includes all 
employees at the factory. 

"I would cut out that part of our by-laws pertaining to 
purchase of retired employees' stock in instalments, make all 
stock purchasable at the death of the employee, pay none of 
the remaining wages in cash, and offer a cash bonus in each 
department figured and announced monthly, but paid in the 
fall." (Booklets, for information.) 

Belle City Malleable Iron Company.. 
racine, wis. 1913. 

(1916) This is a stock participation plan, introduced 
very largely with the motive of encouraging thrift among the 
employees. It applies to heads of departments and the rank 
and file. Within ten days of the original offer, $60,000 
worth of preferred stock had been subscribed for, or about 
double the amount the company had expected would be taken 
up within the first three months. Nearly one-third of the 
employees joined in the subscription and among these were 
about one-fourth of all the Hungarians and Italians, re-, 
spectively, in the company's employ. John A. Chapman, the 
company's agent, makes the comment: "It made quite a dif- 



204 THE NATIONAL CIVIC FEDERATION 

f erence in one's feeling in going through the plant to know that 
every third man had an interest as a stockholder in the com- 
pany, in addition to his daily wage." 

The company agreed to pay employees who took this 6% 
stock an extra 2% diivdend on the stock subscribed for, dur- 
ing a period of five years. Payment was made for the stock 
at the rate of $1.50 per month per share and interest charged 
on deferred payments at the rate of 5%, so that the stock 
received a net credit of 3% per annum during the five years. 

The $1.50 per month, plus the dividends and extra credit 
over the interest rate, would pay for the stock in a little less 
than five years. Employees who resign are not required to 
sell their stock back to the company, and the plan is prac- 
tically without coercive reservations. Such reservations, in 
the opinion of the same representative, "frequently seem to 
vitiate a great deal of the good that such a plan is capable 
of developing in the men." 

This representative states further that he has talked with 
more than forty different railroad employees, all union men, 
and, with one exception, "all were of the opinion that such 
a plan as has been put into operation by the Belle City Malle- 
able Iron Company would provide an opportunity for the 
men to place their savings in the business in which they are 
working and with which they are familiar and would prove 
an incentive for them to save." One street car conductor is 
quoted to the effect that "so many of the men, immediately 
after pay day, spend their money for drink and if something 
could be done to interest them in saving and applying against 
the purchase of stock it would be a great benefit to them and 
their families." 

The company regards the plan as entirely successful. 

(1919) Judson F. Stone, president, writes, November 
17: 

"For several years, until a few months ago, we had in 
operation a plan for the sale to employees of preferred 
stock of the company, carrying a bonus as long as the holder 
remained in its employ. This plan worked out very satis- 
factorily, but the stock was called in for other reasons, and we 
now have under consideration another issue of preferred 
stock, of somewhat different terms, a part of which will prob- 
ably be offered for subscription to employees. 



PROFIT SHARING REPORT 205 

"We also have in operation a profit sharing plan which 
is participated in by officers and foremen, which we feel is 
very satisfactory to all concerned. The profit sharing plan 
is participated in by about fifteen people, who are all highly 
in favor it. We have not at present any profit sharing plan 
which includes the common laborer. 

"Owing to the very unusual conditions which have existed 
during the last few years, it is hard to estimate just what the 
effect of these plans have been, but we do feel that our shop 
foremen are particularly loyal to our organization." 

Boston Consolidated Gas Company. 

(See Percentage of Profits.) 

Builders' Iron Foundry, 
providence, r. i. 

(1916) This company has in effect a plan whereby 
officers and leading employees may purchase debenture cer- 
tificates in the nature of profit sharing. Interest is paid on 
these certificates at the same rate as the dividends on the com- 
pany's stock, but not less than 6% in any event. Payment for 
the certificates is made in part by the subscribers and in part 
by contributions by the company, after the first two years, 
in proportion to the annual increase in its surplus. The sub- 
scriber acquires no rights as a partner or stockholder nor does 
he become liable for any debts or obligations of the company. 

An officer of the company states that he has at times con- 
sidered the idea of allowing the employees to appoint a repre- 
sentative to be consulted by the directors in regard to matters 
chiefly affected by the attitude of the men, but that this has 
not been done because of the following practical disadvan- 
tages: 

"The man oftentimes does not appreciate that what 
is shown him should be confidential, and he sometimes 
feels it his duty to report to the men, and they feel they 
have the right to question him minutely about everything. 
They are soon, if anything, more suspicious of him than 
of us. He also is apt to be a man unacquainted with 
business and inclined to think profits are very much larger 
than they really are and that he is being deceived. If it 
is a union shop there is danger that he is really appointed 



206 THE NATIONAL CIVIC FEDERATION 

by the union and that whatever he does may be a move in 
play for business if nothing more on their part. We have 
tried, as a rule, to make the foremen feel that they must 
represent the men in all conferences with us, and we have 
endeavored to make the men feel that the foremen do so 
act." 

(1919) Z. Chafee, for the company, November 11: 

"Our co-operative debenture plan has been in use since 
1911, chiefly with the leading men of the concern and those 
among the older ones who are closely identified with the cor- 
poration. We believe that all are enthusiastic in favor of 
the plan. The co-operative debenture holders vote upon those 
who shall or shall not be included among their number. They 
consider the rate of dividend that the circumstances warrant 
to be paid to the stockholders, and they vote upon matters of 
general policy in the same manner as though they were stock- 
holders. At times they and the stockholders have joint 
meetings. 

"The savings debenture plan is comparatively new and 
we have not pushed it as we did not in any way wish to 
interfere with liberty loan or thrift stamp campaigns. The 
holders of savings debentures with others in our employ are 
members of our economic club. The interest of this club is 
developing and we think it will be helpful to all concerned. 
The chief desire of both plans is to establish a feeling of 
partnership and develop the thought that all of us should 
work and want to work for each other, and that none of us 
can profit in the long run unless all do their best for the 
common objective. 

"No plan can be described as an unqualified success, and 
we are not among those who make the mistake of believing 
that any plan is a panacea. The real thing about any estab- 
lishment, as we see it, is for every one to feel himself to be 
inspired to feel that his job is worth while and that all have 
the opportunity of working together for the common good. 
We believe that loyalty on the part of the foremen and man- 
agers can do more good than any plan of so-called 'profit 
sharing,' but some plans undoubtedly are helpful. We like 
our own, as it makes the men more definitely partners than 
do some of the other plans that we have considered." 

The amount of the savings debenture certificate is repaid 
on the 15th of March, June, September or December, on 10 



PROFIT SHARING REPORT 207 

days' notice at the pleasure of the Builders' Iron Foundry, 
or on 30 days' notice given the company by the holder thereof. 
While the debenture is outstanding interest on the amount is 
paid by the company at the rate of 6% per annum, or, during 
each year, at such higher rate as is equivalent to the rate 
earned during that year on its invested capital by the Builders' 
Iron Foundry, after paying all taxes. 

Canada Cement Company, Limited. 
Montreal, P. Q. 

(1919) S. R. Dobb, comptroller, December 23: 
4i On April 1, 1916, this company formulated a plan 
whereby its employees were given an opportunity of becom- 
ing shareholders in the company under what are considered 
very favorable conditions. The first allotment of stock was 
made on April 1, 1916, and was confined to heads of depart- 
ments and plant superintendents, which included a total of 
21 employees. The second allotment was made December 1,. 

1918, which included 59 employees, in which number we en- 
deavored to include members of the office staff and foremen 
at the plants, in addition to the heads of departments and 
superintendents. A further allotment was made in June, 

1919, which included 157 employees and in which number 
we endeavored to include all employees whose services we 
wished to retain irrespective of their positions. Since the 
inauguration of the employees' stock distribution plan, stock 
has been allotted to 237 employees, and of this number 21 
have left our employ thereby cancelling their subscriptions. 

"At the time that the plan was drawn up it was intended 
to make it more general, but owing to the outbreak of war 
and other conditions affecting the industry we have not given 
it the scope which we intended. We believe that those who 
have been allotted stock appreciate the benefits they derive, 
and since its inception we have had no serious labor troubles, 
but we do not believe that this is altogether due to the em- 
ployees stock distribution plan." 

The company describes its allotments of stock instalment 
methods, etc., in a printed circular. 



208 the national civic federation 

The Cleveland Worsted Mills Company, 
cleveland, ohio. 

(1919) 0. M. Stafford, president, November 12: 

'We have tried the bonus system, we have tried the 
premium system, and various other methods, and our experi- 
ence convinces us that none of these have proved effective 
or have accomplished the purposes intended, the feeling of 
our employees being that they should have had the bonus or 
the premium in their wages week by week, in other words 
that they earned it and we should have given it to them. 

'We have discussed many other plans. The one most 
carefully considered until the adoption of the stock plan was 
to treat the yearly wages of each employee as his invested 
capital in the company and at the end of the year to pay him 
in money the same rate of dividend on his wages as the stock- 
holders receive on their stock. We made diligent inquiry 
about this plan and found that it had been in operation but 
the success was problematical. 

"Several years ago when we had an increase of the 
authorized capital stock, the stockholders unanimously set 
aside a certain amount of the stock, to be sold to such of our 
employees who seemed worthy and interested, at par, with 
a minimum initial payment of 5% and then at least the 
amount of the dividends to be applied on the principal year 
by year, the rate of interest being 5%. At first not many 
were interested but within the last two years the interest has 
greatly increased until now we have hundreds of our em- 
ployees as owners of the stock and more are applying month 
by month. They pay for the stock and thus realize its value. 
We find that their interest is a great benefit to the company 
in many ways. We shall continue this plan as we believe 
it to be the only system or method that seems to meet the 
very human elements involved." 

Commonwealth Edison Company. 

CHICAGO, ill. 

(1916) Any employee who has been in the service of 
the company for one year may make subscriptions of 3% or 
■ 5% of his salary to a savings fund, and the amount depos- 



PROFIT SHARING REPORT 209 

ited by him will draw interest at the rate of 6% compounded. 
Payments must be made within four days after each pay day. 
At the end of five years the employee has the option either 
of taking out his deposits with accrued interest or taking it in 
the form of stock at $120 per share. 

The stock nearly always sells above this figure and almost 
invariably the employees take out their savings in this form. 
If a subscriber leaves the company's service, or is discharged, 
or wishes to discontinue his subscription, the amount he has 
paid in is refunded, with interest. The company reports: 
"We regard it unqualifiedly as a success." 

(1919) William A. Fox, vice-president, October 21: 

'Under our plan any employee who has been in the serv- 
ice of the company one year or more may deposit at his option 
either 3 or 5% of his salary, on which he will be credited 6% 
interest compounded semi-annually. At the end of a five- 
year period he may at his option either draw out in cash the 
sum so credited to his account or he may convert same into 
stock of the company at par, $100 per share. In view of the 
fact that the stock has averaged in years past anywhere up to 
$130 or $140 per share, this option has proved a very valu- 
able one to the employees. The plan has been in force for 
something oven ten years and has been very satisfactory. 

'We also have a service annuity plan in operation, which 
we think gives very good satisfaction." 

The provision for this feature of the company's plans 
reads : 

"The service annuity for each employee retired under 
this service annuity system shall be computed for any year 
as follows: For each year of service 1%% of the average 
annual pay of such employee during the particular consec- 
utive five years of service when such employee's average 
pay was highest, excepting that the service annuity for each 
employee retired after a continuous period of service com- 
mencing prior to November 1, 1913, shall be computed for 
any year as follows: For each year of service, 2% of the 
average annual pay of such employee during the particular 
consecutive five years of service when such employee's aver- 
age pay was highest. The service annuity committee may, 
however, in exceptional cases of service, increase the service 
annuity of an employee retired with a first-class record. In 
no case shall the service annuity of an employee retired 
after a continuous service with the company of fifteen years 



210 THE NATIONAL CIVIC FEDERATION 

or more be less than $300 nor more than $6,000 per an- 
num, and in no case shall the service annuity of an em- 
ployee retired after a continuous service with the company 
of less than fifteen years be less than $100 nor more than 
000 per annum." 



Commonwealth Power, Railway and Light Company. 

NEW YORK. 1916. 

(1916) On January 15, the company announced a plan 
to aid its employees to purchase common stock of the com- 
pany at $60 per share. The offer was extended to all em- 
ployees, including heads of departments and the rank and 
file. The plan became effective February 1, and of the 5,500 
employees 1,300 have entered subscriptions. 

Payments on the stock are to be made by deduction of 
$1 per share per month from the wages of the subscribers. 
Interest on unpaid balances is charged at the rate of 5% per 
annum, and dividends on the stock are credited to the pur- 
chase account. For the past three years the dividends have 
been 4%, and on this basis the monthly payments by the 
subscribers plus the dividends and less the interest charges 
will fully pay for the stock in 1920, at which time the total 
amount withheld from the employee's wages will have been 
$49.63 per share. At the price at which the stock is offered 
to employees the actual dividend yield is 6 2/3%. An em- 
ployee may subscribe for no more than two shares for each 
$300 (or fraction thereof) of his annual wages. The stock 
is not delivered to the employee until fully paid for and 
meanwhile is not transferable. 

In case of the resignation or death of an employee, settle- 
ment will be made by delivery of as many shares of stock 
at $60 per share as the net amount paid in and accumulated 
on the account will purchase, with check for any balance 
remaining. 

Subscribers may reduce their subscriptions and have the 
net amounts paid in applied to the purchase of shares in full. 

To assist employees in understanding the plan, tables are 
included in the announcement showing the amounts that 
would be deducted from wages, the dividends to be received, 
the interest charged, and the equity acquired from quarter 



PROFIT SHARING REPORT 211 

to quarter until 1920 on the purchase of from one to twenty 
shares of stock. 

(1919) Jacob Hekma, secretary, October 9: 
'"During the war, conditions made it advisable for the 

company to discontinue the payment of dividends on its com- 
mon stock, which resulted in the market value falling below 
the subscription price to the employees. In view of this, and 
also because of the fact that with the discontinuance of the 
dividends the employees received no income from the stock 
subscribed, offsetting the interest on the unpaid balance of the 
subscription, the payment of subscriptions under the plan was 
suspended." 

The DeLaval Separator Company. 

NEW YORK. 

(1920) Francis J. Arend, president, January 27: 
"Briefly, our plan provides for the subscription on the 

part of employees to investment and profit sharing certificates 
to the extent of 10% of their salaries or wages at the end of 
each half year (limited in the case of a few of the larger 
salaried employees), and the amount of the profit sharing 
certificates at the beginning of each year shares in the profits 
of the business for that year pro rata with the net investment 
of the stockholders, apart from the fund subscribed by em- 
ployees. Subscriptions made July 1 of each year share to 
the extent of one-half in the profits for that year. 

'The share of profits of the employee is paid to him as 
soon as the year's net profits have been determined, ordinarily 
March 1. The only practical difference between the profit 
sharing employee and the stockholder is that the employee 
gets his full share of the profits, while the stockholder's share 
is limited to dividends declared, usually less, of course, than 
the full amount earned. 

"Our plan is devised to fit the circumstances of a close 
corporation, where it would be impracticable to sell stock to 
employees. It has the further advantage perhaps that they 
get their full earnings each year and may realize the amount 
invested at any time. There is no risk or speculation about it. 

"Incidentally, we have a wage and salary retention plan, 
JDy which the employee may have 10% of his weekly or 



212 THE NATIONAL CIVIC FEDERATION 

monthly salary or wage retained toward conversion into a 
profit sharing certificate at the end of a half-year, receiving 
interest on the retention. 

''The plan has been in effect with us since July 1, 1916. 
It has worked very well with office employees and traveling 
sales representatives, of which latter we have some 500. Two- 
thirds of our office and more than half of the field employees 
are regular subscribers. It has not worked so well thus far 
with shop employees, of whom not more than 15% have be- 
come subscribers. These, however, include most of the fore- 
men and more important employees. We feel, though, that 
it is not yet possible to judge of its practicability in regard to 
shop employees since for almost the full period it has been 
in effect the great majority of our shop employees have been 
paying for one issue after another of Liberty bonds in an 
instalment way. We have refrained from urging profit shar- 
ing subscriptions upon them for this reason. 

"There is one obstacle with respect to the plan in the case 
of shor> employees that we have yet to overcome, and that is 
the difficulty of getting them to understand it. For the first 
year we did not want to urge it upon any one, and have not 
done so since because of having to urge Liberty bond sub- 
scriptions instead. With these out of the way we are still 
confident the majority of our permanent and better shop 
employees can be made investors and profit sharers, with 
mutual benefit to them and the company. 

'We gave a great deal of consideration to various kinds 
of profit sharing plans before devising our own, which, so 
far as we know, was then novel. We have had no reason to 
change our conviction since as to the wisdom of the elements 
it includes, as well as to the omission of some common to 
most plans." 

Thomas Devlin Manufacturing Company, Inc. 

manufacturers of malleable iron fittings, 
(factory: burlington, n. j.) philadelphia, pa. 1905., 

(1916) Upon payment of $1 a week, employees who 
render "continued and faithful service" and who earn $10 
per week or over receive dividends upon $500 worth of 
stock of the company for a term of five years. As soon as 



PROFIT SHARING REPORT 213 

the cash payments and earnings of the stock amount to $100 
a certificate of stock is issued covering such amount. Same 
arrangements are in force, whereby employees who pay $2 
a week receive dividends on $1,000 worth of stock. Some 
of the employees own $3,000 to $4,000 worth of stock. 

An official of the company states that the plant was moved 
from Philadelphia to Burlington, N. J., largely on account 
of troubles with the molders' union. The stock ownership 
plan established for the new employees at Burlington was 
offered to the remaining force at Philadelphia, but the men 
were suspicious and refused to accept it. 

The company reports that the plan has worked very suc- 
cessfully with a majority of the employees, but that in the 
case of a certain proportion of the employees very poor re- 
sults have been accomplished. When these employees have 
paid in $50 or $60, they are accustomed to leave the com- 
pany in order to draw out what they have paid in. 

(1919) Thomas Devlin, president, October 10: 

"Our profit sharing plan would be a complete success if 
the concern were large enough and there were a market for 
the stock. Since the business is a close corporation there is 
no market. The intention was to get all heads of depart- 
ments and all the mechanics interested first and eventually 
everybody. The lack of a market is a great drawback, and if 
we could be supplied with that the plan would be perfection." 

The plan is still in force, not having been changed since 
1916. The average number of employees of the company 
is about 1,000. When there is a profit from the stock their 
feeling toward the plan is favorable. Sixty-three of the 
stockholders are workmen, who own $109,000 in shares out 
of $830,000 issued. 

Dort Car Company, 
flint, MICH, 1915. 

(1916) Heads of departments are permitted to acquire 
stock in the company by giving a note in payment, with the 
stock as collateral. The note is paid from the earnings on 
the stock. Another method is provided by setting aside a 
certain amount of stock on which dividends are paid, the 
stock being delivered to the employee at the end of five years 



214 THE NATIONAL CIVIC FEDERATION 

if he has remained in the company's service during that 
period. 

To all other employees a quarterly cash distribution is 
made, based upon length of service. Between 30 and 40 of 
the 100 employees are at present entitled to participate in 
this distribution. 

The company states that it sees no reason why the plan 
is not a success, "as it provides periodical revenues for em- 
ployees who have been faithful for a term of years." 

(1919) F. A. Aldrich, secretary and treasurer, Sep- 
tember 5: 

'The Durant-Dort Carriage Company is out of business 
and has been out of operation for practically four years. 

"On December 23 last the company distributed approxi- 
mately $40,000 to loyal employees and has at the present 
time a list of over 200 other employees who presumably are 
entitled to the same recognition. When their records are 
examined and approved another distribution will take place 
and that will be the final distribution. The Dort Motor Car 
Company is the official successor of the Carriage Company, 
but has not instituted any loyalty or merit plan as yet. It 
does permit desirable employees whose services it wishes to 
stabilize to acquire block of stock to be paid from the 
earnings and that is as far as this company has gone along 
these lines." 

du Pont de Nemours Powder Company, 
wilmington, del. 

(1916) An opportunity is given each year to all em- 
ployees who have been with the company two years to buy 
preferred stock on the instalment plan, a certain agreed sum 
being deducted from the monthly salary. The number of 
shares that may be bought is in proportion to the amount of 
salaries. Employees who remain in the service for five years 
are allowed a bonus of $3 a year. 

Employees who have done some particularly meritorious 
work are given stock, which is held in their names. When 
the dividends on a man's stock amount to the purchase price 
of a share of stock it is given to him and not before. 



PROFIT SHARING REPORT 215 

Since April, 1915, a stock bonus of 20% of salaries has 
been given at the end of each month to salaried employees 
whose work is perfectly satisfactory in every respect. The 
company has announced that this bonus will be continued 
throughout 1916. 

In October, 1915, at the time of the change of the E. I. 
du Pont de Nemours Powder Company to E. I. du Pont de 
Nemours & Company, of Delaware, with $245,000,000 capi- 
tal, a distribution of two thousand shares of stock of the old 
company was made to the large office force, in reward for 
faithful service, the value of this stock being about 
$1,600,000. 

(1919) H. Fletcher Brown, vice-president, November 8: 

"Our employees' stock subscription plan is still in force, 
and there has been practically no change in it since 1916 ; 
2,146 employees have been allotted stock under this plan, to 
the amount of 6,112 shares; to date, the total number of 
shares allotted is 29,525. 

"The bonus plan is also still in effect. Bonuses are 
granted under two classes: Class A for inventions or other 
conspicuous service, irrespective of the company's earnings; 
Class B in the nature of profit sharing to those who have con- 
tributed most in a general way to the company's success. 
Class B bonuses correspond to approximately 7% of the sur- 
plus left from earnings after the payment of debenture 
stock dividends and 5% on the common slock. Under this 
bonus plan about 260 separate employees have thus far re- 
ceived "A" bonuses and about 4,089 separate employees 
have received "B" bonuses. 

'We are well satisfied with the results of this bonus plan, 
and attribute to it a considerable share of the success real- 
ized by the company during the war. 

"This company has a merit payroll plan, by which em- 
ployees who have been in the service of the company for one 
and not more than two years are given 5% additional pay; 
two to five years 10% ; five to ten years 15% and ten years' 
service and over 20%. This extra or merit pay is given in 
the form of a separate check monthly. By this means we 
have materially reduced the turnover at certain plants. 

"Neither our bonus plan nor the stock subscription plan 
reach the majority of men on the payroll, and we are con- 



216 THE NATIONAL CIVIC FEDERATION 

sidering the adoption of some plan which will be more gener- 
ally applicable to these men. 

'We have very recently adopted a group insurance plan, 
under which all of the employees who have been in the service 
of the company more than six months are granted group life 
insurance." 

Edison Electric Illuminating Company of Brooklyn. 

(See Percentage of Profits.) 

Samuel Elman Company. 

clothing factory. syracuse, n. y. 

(1920) February 29, the local press announced that 
this recently incorporated company was offering its 200 em- 
ployees common stock valued at $100, a 7% dividend guar- 
anteed, at $80 a share, 10% to be paid yearly. It was said 
that several employees had arranged to pay for their stock in 
weekly instalments, while others were making lump payments 
each year. 

First National Bank of Chicago. 
CHICAGO, ill. 1903. 

(1916) For a number of years, this institution has had 
in force a plan under which employees may purchase stock 
of the bank within ten points of the market price. If de- 
sired, the money may be borrowed from the bank at the rate 
of 4% for such purchases and repaid in instalments of $5 
a month for each share. 

The president, James B. Forgan, says in telegram of 
March 27, 1916: "There are now 776 employees, of whom 
130 are availing themselves of the opportunity. The plan 
was put in operation in January, 1903, and is limited to mem- 
bers of the bank pension fund. All clerks eighteen years and 
over, of whom there are 695, are members. The plan is a 



success." 



profit sharing report 217 

The Ford Motor Company. 

(See Exceptional Plans.) 

Frost Gear and Forge Company, and 
General Electric Company. 

(See Special Distributions.) 

General Motors Corporation. 

NEW YORK. 

(1919) The company's plan went into effect for 1918 

and remains unchanged. 

J. A. Haskell, vice-president, writes, December 1: 

"In our annual report for the year ended December 31, 

1918, there is this reference to our bonus plan: 

"The corporation has adopted a bonus plan under 
which stock of the corporation is distributed each year as 
a reward to its employees, including employees of subsid- 
iary companies, who have contributed to its success in a 
special degree, by their inventions, ability, industry, loyalty 
or exceptional service. It is hoped thereby not only to 
compensate services rendered but also to encourage further 
efforls by making its employees partners in the corpora- 
tion's prosperity. Under the bonus plan, the amount which 
may be distributed each year is determined by taking 10% 
of the net earnings of the corporation after deducting there- 
from an amount equal to 6% on the capital invested. The 
bonus plan is in no sense a profit sharing plan in the 
meaning of that term as generally used. There was award- 
ed for the year 1918, under this plan, a total of 24,334 
shares of the common capital stock of the corporation, at 
a cost to the corporation of approximately $2,798,410." 

"Awards under the bonus plan were made to 2,700 em- 
ployees for 1918. The total number of employees as of 
December 31, 1918, was 49,118. 

'The savings and investment plan was put into operation 
during the early spring of 1919 effective for the full year. 
The average number employed by the corporation during 
the ten months ended October 31, 1919, was 72,997, and of 
these 59,046 were eligible to participate. The average num- 
ber participating was 18,876, or 32% of those qualified. 



218 THE NATIONAL CIVIC FEDERATION 

A press dispatch of March 26, 1920, states: "Any em- 
ployee can deposit $5 or multiples thereof up to 10% of his 
annual wage, but not to exceed $300 a year. The plan pro- 
vides that the corporation shall match each employee's sav- 
ings by crediting his account with an amount equal to his 
deposits, paying interest on the total at the rate of 6% per 
annum, computed semi-annually. A new class is started each 
year to terminate in five years. As each class matures the 
beneficiary may elect to take cash, securities in which the 
funds have been invested or leave the money to continue at 
interest." 

The General Motors Corporation is composed of the Cad- 
illac, the Buick, the Chevrolet, the Oldsmobile, the Oakland, 
the GMC Truck, etc, and the welfare plans are applicable 
to all. 

The company issues several pamphlets containing detailed 
information as to its bonus and other plans. 

The Goodyear Tire and Rubber Company. 

akron, ohio. 

(1916) Heads of departments and branch and district 
managers of the company are permitted to acquire common 
stock at par on the instalment plan. The amount allowed 
to each man is determined by the management, largely ac- 
cording to length and merit of service. The plan affects 
some 235 employees in a total force of about 8,500. 

The company states that all employees who are benefited 
by the opportunity to purchase stock appreciate it and "un- 
doubtedly the service rendered by them is on a higher plane 
than it would otherwise be." 

At times during rush production, the company has here- 
tofore paid a 5% bonus in some departments for steady 
attendance, but it did not find the plan successful and it has 
been discontinued. 

(1919) C W. Seiberling, vice-president, November 18: 

"We have gone in for profit sharing to the extent that 
about 1,000 of our employees are common stockholders 
They have bought their stock at par, given their notes and 
paid their notes in dividend. We are now re-financing our 
company, increasing the stock to 200 millions; 100 million 



PROFIT SHARING REPORT 219 

common and 100 million 1% preferred. We have approxi- 
mately 25,000 employees, of whom 17,000 have subscribed 
for this new 7% preferred stock in amounts from 1 to 20 
shares. The subscriptions amount to $7,364,700. They are 
given two years to pay for the stock, paying $1 per week 
per share. For every year they remain in our employ and 
retain their stock up to live years they receive a 3% bonus. 
They are therefore getting 10% on their investment. 

'We believe that this is one of the best plans for inducing 
employees to save their money and at the same time become 
owners as well as employees of the Goodyear Tire and Rub- 
ber Company. 

'With 17,000 of our employees as first preferred stock- 
holders and over 1,000 as common stockholders, over three- 
fourths of our employees are stockholders in our company. 

'We first began by taking the heads of our Departments 
into partnership by giving them stock in 1908. This has been 
broadened so as to take in foremen and other employees. 

'Taking our employees into partnership and having a 
very broad plan of social service, athletic and recreational 
activities has made our employees as a whole happy and con- 
tented and unquestionably lessened labor troubles. 

'What the employee wants is not charity but human in- 
terest taken in him by the employer." 

In an address to the Western Mining Congress, in Novem- 
ber, Mr. Seiberling described the financial, welfare and other 
relations of the company with its employees. (Pamphlet). 

Great Northern Railway Company, 
st. paul, minn. 1900. 

(1916) Employees other than day laborers, who have 
been in the service of the company continuously for at least 
three years and whose yearly salaries or wages do not exceed 
$3,000 are enabled to invest their savings with the company 
In the following manner: 

A separate company was formed, known as the Great 
Northern Employees' Investment Company, which subscribed 
for stock of the Great Northern Railway Company at par, 
to the amount of $1,188,000. Employees eligible under the 
above conditions may subscribe for certificates in the Invest- 



220 THE NATIONAL CIVIC FEDERATION 

merit Company upon payments of $10 or multiples thereof, 
but not more than $5,000 worth may be purchased by any 
one employee. 

Interest is paid to the holders of these certificates at the 
same rate per dollar as the dividends on Great Northern 
Railway stock held by the Investment Company. This divi- 
dend rate has been 7% for many years. 

All expenses of management of the investment company 
are paid by the railway company. The certificates are not 
transferable. The company may demand surrender of a 
certificate at any time and will thereupon pay to the holder 
its face value, together with any accrued dividends payable 
before the date of redemption fixed in the demand for sur- 
render. An employee who has completed his subscription 
for a certificate is not permitted to reinvest until after the 
expiration of three years. The company will refund upon 
ten days' notice the principal of any certificate held by an 
employee, together with all dividends declared and payable 
thereon; but employees who cash their certificates under this 
privilege are not permitted to subscribe again, the intent of 
the plan being that employees shall retain their holdings so 
long as they are in the company's service. Within six years 
subscriptions had been received for nearly the entire allot- 
ment of stock. 

(1919) W. P. Kenney, Federal manager, October 9: 

"I think your letter (of inquiry) must have been ad- 
dressed to us in error, as of course no lines under government 
control would enter into any profit sharing arrangements." 

Harsh & Chapline Shoe Company, 
milwaukee, wis. 1914. 

(1916) Employees may buy stock of the company on 
the instalment plan, paying from 50 cents a week up, and 
upon this stock they receive 6% interest and a graduated 
share of the profits of the business. The offer is open to all 
efficient employees, regardless of length of service. The 
company has between 400 and 500 employees, more than 
half of whom have applied for stock under this plan. Pay- 
ments made toward the purchase of stock may be withdrawn 
at any time. The company states that the plan means to the- 



PROFIT SHARING REPORT 221 

manufacturer "that*he does not see his men loafing, tools are 
not destroyed and better work is turned out." 

(1919) C. 0. Chapline, vice-president, October 15: 
"We have no profit sharing plan in our business other 
than a weekly bonus, which is based on quantity and quality 
production. We have never seen nor heard of a plan that 
in our opinion was thoroughly equitable, because of the fact 
that plans do not provide for a share in losses should any 
occur. We sell common stock to those of our employees 
who care to buy it and have quite a few common stockholders. 
This is the nearest to a fair profit sharing plan we have been 
able to decide upon." 

Hart, Schaffner •& Marx, 
chicago. new york. 

(1919) Earl Dean Howard, November 12: 
'We have no comprehensive plan of profit sharing. 
About three years ago we distributed shares of our common 
stock to minor executives, to be paid for in instalments 
deducted from their wages. This plan we believe to have 
been very successful in securing the interest and loyalty of 
those men. We have never, however, extended the principle 
to classified employees. The plan covered but a very small 
percentage of our people, and indeed only men having some 
executive authority, and not strictly wage-earners." 

H. P. Hood & Sons. 

DISTRIBUTORS AND PRODUCERS OF MILK AND DAIRY PRODUCTS. 

BOSTON, MASS. 1914. 

(1916) A special issue of $200,000 worth of preferred 
stock of the company, paying 7% dividends, is available for 
purchase by employees at $10 per share par value. This 
stock has voting power and may be purchased by any em- 
ployee who has been in the service of the company for three 
months or longer. The company reserves the right to re- 
purchase the stock if any subscriber leaves its employ, and 
in case of death of an employee the stock will be redeemed 
at an advance of 25% above its par value. 



222 THE NATIONAL CIVIC FEDERATION 

For the past eight years the company has also maintained 
a somewhat complicated system of bonuses, based upon the 
individual efficiency of employees as it affects the financial 
returns of the business. 

(1919) The auditor of the company, October 8: 

"Our profit sharing methods remain as described to you 
in our letter of May 3, 1915, and our comment to-day would 
be substantially as then stated." 

The Hydraulic Pressed Steel Company. 

cleveland, ohio. 

(1919) Profit sharing, installed in this company in 
1914, now affects 30% of the 3,500 employees. The results 
are reported by H. B. Bole, first vice-president, as "fine," 
with better labor relations in the plant. The profit sharing 
goes "right down the line," owners, executives, managers, 
department heads, superintendents, foremen, to unit bosses, 
but there the line is drawn. The vice-president adds: "It 
is regarded as an unqualified success as far as it has gone. 
We feel, however, that some time in the future we will have 
to extend it through some means, either in the form of divi- 
dend in connection with a thrift plan or some other form, 
through our entire organization." 

Illinois Central Railroad Company. 
CHICAGO, ill. 1893. 

(1916) In response to the expressed desire of many 
officers and employees of the Illinois Central Railroad to 
invest their savings in stock of the company, former President 
Stuyvesant Fish in 1893 announced a stock purchasing plan 
upon the following lines: 

Employees may purchase one share of stock at a time 
and pay for it in instalments of $5 or multiples thereof. On 
these payments interest is credited at 4%, and when the total 
credit of payments and interest equals the subscription price 
of the stock it is issued to the purchaser, who may then, if 
he wishes, begin the purchase of another share. This stock 
is transferable and has full dividend and voting rights. 



PROFIT SHARING REPORT 223 

On the first of each month the company quotes to em- 
ployees the "fair market price" at which applications for 
purchase of stock will be accepted during that month. If a 
subscriber makes no payments on his stock for twelve con- 
secutive months, no further interest is allowed on his account, 
but the sum to his credit is returned to him upon application. 
Employees who desire to cancel their subscriptions before 
completion may have their payments returned with accrued 
interest. 

Subscribers are expected to make their first payments 
from the first wages which may be due them. They may 
authorize the paymaster to retain from their wages monthly 
instalments on the purchase of the stock. Employees who 
leave the service must either pay in full for the stock sub- 
scribed for or accept in cash the deposits they have made, 
with accrued interest. Employees who have not subscribed 
on the instalment plan may, if they prefer, purchase in any 
one month one share for cash outright, at the price fixed for 
that month. 

Three years after the introduction of this plan, President 
Fish, in a further explanatory statement to the employees, 
noted with much gratification "their increasing desire thus 
to identify their interests with those of the company." The 
plan is still in effect, without modification, as orginally 
adopted. 

(See Great Northern Railway Company.) 

International Harvester Company, 
chicago, ill. 1915. 

(1916) In December, 1915, the company announced 
a plan to assist its 35,000 employees to become stockholders 
and sharers in the profits. Under this plan, employees have 
an opportunity to purchase profit sharing certificates in the 
company, payments for which are made in monthly instal- 
ments from their salaries. These certificates, it is provided, 
may be converted into stock at $3 below the market value. 

The profit sharing certificates range in denominations 
from $50 to $1,000. To the payment of every employee 
taking advantage of the offer before March 1, 1916, the 
company offered to add 1% of his earnings annually. Over 



224 THE NATIONAL CIVIC FEDERATION 

twenty thousand of the employees enrolled. At some works 
more than 90% of the shop men subscribed. The general 
average for all plants is over 70%. The aggregate amount 
subscribed is over $5,000,000. 

Interest will be paid at the rate of 5% per annum on all 
employees' payments and credits on their profit sharing cer- 
tificates. In addition to the annual dividends on stock, the 
company also will pay to the employee an amount equal to 
the extra dividend which he would receive upon his stocky 
if the entire excess of the net profits for each year prior to 
1921, over an amount equal to 6% of the money invested in 
the company's business during the year, were distributed pro 
rata to all holders of its common stock. 

Provision is made for postponement of payments in case 
of illness or unavoidable lay-off. Certificates can be turned 
into cash at the will of the employee. The plan will terminate 
in January, 1921. 

The company has been endeavoring for some time to 
devise a profit sharing plan which would reach and benefit 
the rank and file of the employees and not merely the depart- 
ment heads and foremen. An official of the company states 
that the employees are eagerly accepting the new opportunity 
and that since the plan was adopted over 60% of the men 
in some plants and over 80% in others have already sub- 
scribed. This official says further that if the new system 
"tends to make the employees thrifty and saving and ac- 
complishes nothing else, I believe that it will be worth all 
that it costs the company; but there are many other advan- 
tages to accrue to both the employee and the company through 
his becoming associated as a stockholder. One of the evident 
advantages is the independence of the employee in being able 
at any time to take his certificate of stock to a bank and 
borrow money at a reasonable rate of interest to tide him over 
some financial crisis." 

In its monthly magazine, "The Harvester World," the 
company lays the new plan before its employees in a brief 
announcement of the essential features, with an invitation to 
"Join the Harvester Family Profit Sharing Plan." 

In the same number Gyrus H. McCormick, in the course 
of an article entitled "A New Confidence," makes the follow- 
ing comment upon the profit sharing plan: 



PROFIT SHARING REPORT 225 

"A new feeling of confidence in the future, owing to 
our ability to come safely throguh the present crisis, has 
encouraged the directors to take a step which they have 
long been striving to accomplish. A new plan of profit 
sharing has just been adopted, which is intended to bene- 
- fit all the employees whose incomes are the smallest and 
who have not before participated in our profit sharing fund. 
The company is glad to announce the new plan, the details 
of which have just been given out, and hopes it will be re- 
ceived with favor by all the employees. This is a further 
evidence that the directors wish the employees to know that 
this business is their business, and that the company's in- 
terests and theirs are closely linked together." 

The disposition to award "extra payments to labor" has 
been prominent throughout the history of this company. In 
1903, at the time of the merger of the McCormick Harvesting 
Machine Company in the new International Harvester Com- 
pany, the members of the McCormick family made a special 
distribution to employees who had been in the company's 
service during the preceding five years, amounting to 5% 
of the total salaries or wages they had received during that 
period. The distribution was in the form of stock of the 
International Harvester Company, held in trust for five years, 
with certificates of participation issued to the employees 
affected. The holders of these certificates were entitled to 
all dividends on the stock and they might at any time sur- 
render their certificates and receive cash for the stock it 
represented, at par. In this manner, 14,109 shares of a par 
v^alue of $1,410,900 were distributed to 1,501 employees, 
besides 47 who elected instead to take life pensions offered 
by the company to those over sixty years of age. 

In 1909 the International Harvester Company announced 
a profit sharing plan, a part of which was a cash bonus dis- 
tributed at the company's discretion among employees who 
made a satisfactory showing for the year, the other part 
being a stock subscription plan. 

The bonus was based, in the sales department, upon in- 
crease of sales and reduction of selling expense; and in the 
factory organization it was based upon increased production 
and decreased cost, or a combination of both. In 1911, a 
representative of the company stated that the bonus system 
had not extended far beyond the grade of assistant foreman 
and that all the superintendents were interested in the adop- 



226 THE NATIONAL CIVIC FEDERATION 

tion of a system which would reach every employee. The 
newly adopted plan, therefore, is the outgrowth of several 
years of careful study on the part of the management. 

The stock subscription feature of 1909 allowed the pur- 
chase of company stock by employees on an instalment plan, 
Trie amount any employee might subscribe for was limited 
to the amount of his annual salary, and the payments thereon 
were not to exceed 25% of his salary in any one year. 
Twelve thousand five hundred shares of preferred stock and 
fifteen thousand shares of common stock were offered for 
sale at less than the current market price. Employees who 
remained in the company's service and in good standing for 
five years and retained their stock or interest in it were 
allowed a bonus of $4 and $3, respectively, on every share 
of the preferred and common stock for each of the five years. 
When men left the company's service or discontinued paying 
for stock, the company continued crediting these $4 and $3 
payments to a fund which at the end of five years was to be 
divided among such employees as had fully paid for their 
stock and remained in good standing in the service through- 
out that period. This plan was not renewed upon expiration, 
but it has been replaced by the new system announced in 
December, 1915. 

(1919) G. A. Ranney, secretary and treasurer, No- 
vember 29: 

"Our profit sharing plan, announced December 23, 1915, 
is still in force. It is, however, more than a percentage of 
profits plan, containing the two other distinct elements of a 
fixed yearly bonus to participating employees of 1% of the 
previous year's salary or wages, and of stock ownership by 
voluntary conversion of credits on profit sharing certificates 
into their equivalent in the company's common stock — with 
the further benefit to the employee of a price for such stock 
$3 per share below the prevailing market price at conversion. 

"At this time, credits on profit sharing certificates total 
more than $3,500,000; approximately 3,500 employees have 
become stockholders, having acquired about 16,000 shares. 

"At August 31, 1919, our employees in the United States 
and Canada numbered approximately 37,000 and the number 
participating in the profit sharing plan was about 20,000. 
In this connection it should be noted that more than 1,500 



PROFIT SHARING REPORT 227 

employees had reached the maximum limit of $1,000 pro- 
vided in the plan, and therefore are not included in this total 
of participating employees. 

"The only modification of the plan since 1916 has been 
extension of its period of operation from 1921, as originally 
provided, to January 1, 1924. 

"Judging from the percentage of employees participating, 
from the small number of lapses except on account of leaving 
our employ, from the eagerness of subscribers to convert 
credits into stock and from the equally strong and general 
disposition to retain stock without regard to fluctuations of 
. market price, the plan enjoys a high degree of confidence 
among employees of all grades and departments. About 
50% of profit sharing credits are converted into stock as 
soon as they reach a sufficient amount. The percentage of 
those selling stock acquired under the profit sharing plan 
is so small as to be negligible. 

'The Harvester Company has had only two periods of 
labor disturbance in the seventeen years and more since its 
organization — one of brief duration and comparatively small 
effect on production in 1916 and the other in July-August, 
1919. The disturbances in both instances were limited to 
certain of our eight Chicago plants. The more recent dis- 
turbances, lasting from two to three weeks, resulted from 
the action of less than 10% of the 10,000 or more employees 
affected; the remainder left their work unwillingly and most 
of them returned when operations were resumed. 

"It seems to us quite believable that, while the primary 
purpose and dominant element of our profit sharing plan is 
to promote systematic saving among employees, its very 
general acceptance among them and the extent of their par- 
ticipation have naturally had a mutually beneficial effect in 
fostering the spirit of industrial co-operation." 

International Nickel Company. 

NEW YORK. 1914. 

(1916) Employees are allowed to purchase stock of the 
company at $110 per share by making monthly payments of 
not less than $3 per share, which are deducted from wages 
or salaries. Payments on stock are not to exceed 25% of 



228 THE NATIONAL CIVIC FEDERATION 

the monthly salary. The stock must be paid for within three 
years, and interest at 5% is charged on deferred payments. 

Employees who take stock receive dividends as soon as 
the first instalment is paid, and if they retain the stock and 
remain in the company's employ for five years, rendering 
satisfactory service, they receive an extra 5% on their stock 
for each of those years. 

The extra compensation of employees who cancel their 
subscriptions by leaving the service of the company during 
the five years' period goes into a fund which is distributed 
at the end of the period among the remaining subscribers. 
The number of shares for which an employee may subscribe 
varies according to salary and length of service, the maximum 
being ten shares. 

In the event of cancellation of subscription, the employee 
receives the amount paid with interest at 5%, no credit for 
dividends being allowed. The company has about 4,500 
employees. 

Julius Kayser and Co. 

silk and fabric gloves, etc. new york. 

(1919) This company's plan went into effect September 
1, 1918. To the employees qualified under the plan there 
is apportioned an amount equal to 1% of their year's earn- 
ings for each year of continuous service up to five years. 
Thence to ten years the rate is one-half of 1% for each 
additional year, and thereafter it is 7 1 /2%- Features of the 
method are payments partly in cash and partly to a deposit 
account, the general fund being so far as possible or advisable 
invested in stock of the company. 

Kelly-Springfield Tire Co. 

NEW YORK. 

(1919) C. A. Brown, vice-president, November 11: 

"We have no profit sharing plan in vogue in any of our 
plants, excepting through stock ownership. All of the em- 
ployees of this company are privileged to subscribe each 
year to common stock of the company, for which payments 



PROFIT SHARING REPORT 229 

are permitted to be made in monthly instalments. In our 
particular case it would seem that the employees' oppor- 
tunities through stock ownership are very good and the value 
of this plan of profit sharing is very greatly appreciated, 
particuarly by the higher grade employees. The factory 
workmen, however, do not at all times seem to realize the 
importance of their holdings, but we find this is becoming 
more apparent to them each day. We inaugurated this plan 
two years ago and it is still in effect, and I should say three- 
quarters of all employees of the company are stockholders. 

"We have not had any occasion to determine the effect 
of stock ownership on the rank and file factory employees 
as regards labor disturbances. We have recently had a strike 
in our machine shop, and several machinists who are stock- 
holders came to us and stated that they did not wish to go out 
on strike but were afraid to go to work on account of threats 
made by the radical elements to both themselves and their 
families; therefore they were compelled to remain away from 
work." 

Keystone Driller Company. 

(See Percentage of Profits.) 

F. P. Kirkendall and Co. 

BOOTS AND SHOES. OMAHA, NEB. 1906. 

(1916) Those who have been employed for more than 
one year "and who prove themselves worthy" are permitted 
to subscribe for common stock, the payments coming out of 
the dividends declared upon it. The employees are, however, 
charged 7% interest on unpaid balances, and may dispose 
of their stock only to the corporation. 

The company is planning to have the men subscribe to 
preferred stock instead of common stock, which they think 
will be more satisfactory. 

(1919) President Tailor, of the company, October 10: 

"We have made no change whatsoever in the profit sharing 
plan as used by us for several years and described in 1916. 
Our opinion of same is still unchanged, namely, that it has 
not produced satisfactory results." 



230 the national civic federation 

Lever Brothers, Ltd. 
soap manufacturers. cambridge, mass. 1909. 

(1916) This plant is a branch of an English company,, 
and a full description of the profit sharing plan will be found 
in the chapter on "Experience in England." 

(1919) From the secretarial department of the com- 
pany, November 13: 

"We have recently been advised by our parent company 
that it is proposed to reduce the period of eligibility in our 
co-partnership plan from four years to one year, and also 
to allow employees of 21 years to become co-partners. If 
this proposed change is effected it will, of course, materially 
increase the percentage of our employees who may apply for 
the co-partnership privileges. 

'We now have 56 co-partners out of a total of 700 em- 
ployees. . . . We believe that all the beneficiaries of 
this plan are enthusiastic for it, that co-partners are not 
'floaters,' and that our plan surely is beneficial to employer 
and employee." 

Marshall Field & Company. 

CHICAGO. 

(1919) John McKinley, second vice-president, Novem- 
ber 19: 

"Quite a number, perhaps one-tenth, of our employees 
own one or more shares of our preferred stock. This stock 
carries a regular 7% dividend and when owned by employees 
also an annual bonus of 2%. This plan has been in effect 
for about two years and no doubt has contributed to a state 
of good feeling on the part of our employees. 

"In the sense in which people to-day speak of corpora- 
tions having profit sharing plans, we haven't any. Like many 
other concerns we have been discussing it but have been un- 
able to reach a satisfactory conclusion." 

Midvale Steel and Ordnance Company. 

NEW YORK. 

(1920) Announcement that officers and employees of 
the Midvale Steel and Ordnance Company and its subsidiary 



PROFIT SHARING REPORT 231 

companies would be given the opportunity to subscribe for 
shares of its stock was made January 5, 1920, such subscrip- 
tions to be received between the 12th and 31st of that month. 
The offer was limited to 8,000 shares, par value $50, and 
contained the condition that all questions concerning subscrip- 
tions, allotments and interest would be decided by the Board 
of Directors of the company. 

The maximum number of shares for which employees 
may subscribe varies according to the annual salary or wages. 
Subscriptions are paid in monthly instalments, deducted by 
the company. Cancellations may be made by subscribers 
voluntarily leaving the company's employ, discharged for 
cause, on account of an extended shut-down, or for failure 
to resume employment when requested. Stock certificates are 
to be issued when payments have been completed. A special 
payment of $2.50 per share, in addition to dividends, is to 
be paid after five years' continuous employment. 

Minneapolis, St. Paul and Sault Sainte Marie Railway 

Company. 

minneapolis, minn. 1913. 

(1916) About one-seventh (or 2,000) of the company's 
employees are members of an incorporated association. This 
number includes men in the service of the company from 
the president down to track men, of whom there are two 
to three hundred. To become a member an employee sub- 
scribes for one share of the association's stock, valued at $1. 
No member is permitted to hold more than one share. Each 
member deposits with the association every month $1 or 
more, which is invested bv the officers of the association in 
stock of the railroad company or one of its subsidiaries. 

Dividends are paid to members of the association each 
year. Members leaving the company's service are refunded 
the $1 paid for association stock, as well as their deposits 
with the fund less their proportion of the actual expense of 
administration. The employees during the first year under 
this plan deposited about $100,000, all of which was invested 
in the company's stock. 

(1919) C. W. Gardner, comptroller, writes, Septem- 
ber 5: 



232 THE NATIONAL CIVIC FEDERATION 

'The Soo Line Co-operative Association, to which you 
refer, is an effort made on the part of the employees, at 
the writer's suggestion, to acquire systematically by indirect 
method a profit sharing result. The railway company itself 
has not contributed or assisted the project in any manner 
whatever. 

"The stock ownership plan described in 1916 is still in 
force. The results have been fairly satisfactory or at least 
would have been had not the war projected itself as an in- 
terference. The association has about 1,500 members. The 
feeling on the part of the employees who are members is 
favorable. I believe the plan has had some influence with 
employees in the matter of labor troubles but not such in- 
fluence as would have prevailed had the company indorsed 
the plan and assisted it to some moderate extent. 

"At the time of your 1916 publication the employees 
had invested under this plan about $100,000, whereas their 
present investment is in the neighborhood of $300,000. The 
average number of employees in the company's service is 
about 14,000, and the average number who have invested in 
the co-operative plan is about 2,000. It is open to each 
and every employee and its membership is found in every 
class of employees, including trainmen, station men, me- 
chanics, brakemen and employees of every class. I do not 
think it is regarded as an unqualified success for the reason 
that the conditions of the past four years resulted in a de- 
preciation of the assets belonging to the association. From 
a dividend paying viewpoint, however, the association has 
been a success and has not failed to declare and pay a divi- 
dend each year of its existence and to put aside a small 
amount of surplus each year. 

"I am of the opinion that the plan as followed up to date 
has been beneficial and has met a real need; that it was 
probably a correct plan for the conditions prevailing during 
that time, but that some modifications in it should now be 
made, and that if the railway company officially indorsed it 
and gave it some reasonable moderate assistance substantially 
all of its employees would become members and thus in- 
directly shareholders in the corporation." 



PROFIT SHARING REPORT 233 

Morris & Co. 

PACKERS. CHICAGO, ILL. 

By its plan put into operation, September 1, 1919, this 
company sold more than $2,000,000 of stock to its employees. 
The profit sharing was made retroactive from the beginning 
of the fiscal year November 1, 1918. In January, 1920, 
those employees who had paid cash for their stock got the 
equivalent of 60% per annum. For $100 stock the em- 
ployees paid $86.50 and drew interest on their full face 
value. The total amount subscribed was $225,000. The 
company issues 4^/2% collateral gold bonds, face value $50 
and multiples. Employees may purchase as many of the 
bonds as they desire, either in cash or on two years' instal- 
ments. The company guarantees that the net return on a 
profit sharing certificate, including interest on the bonds, shall 
not be less than 10%. The 2,991 employees taking up with 
the plan subscribed for $1,918,000 bonds; 42% of the office 
force subscribed;. 12% of the packing plant; 22% of the 
branch houses and 18% of the foreign branches. 

Fairbanks, Morse & Co., Chicago, who had offered em- 
ployees 12,500 shares of common stock on time payment, 
announced applications as double the amount offered. Over 
1,400 workers, representing 21% of the payroll, applied for 
24,500 shares. 

The Narrow Fabric Company, 
reading, pa. 

(1919) This company, with an average of 850 em- 
ployees, of whom about 300 have become employee stock- 
holders, put its plan into effect January 1, 1917, as stated 
by H. M. Frey, secretary. The plan comprises stock selling 
to employees whose application is accepted by the company, 
together with preferential dividends on employees' stock and 
a further profit sharing fund from an otherwise undivided 
balance. 

In the opinion of the secretary the plan has been the means 
of stabilizing employment and avoiding labor trouble, and is 
receiving the hearty support of the employees. 



234 the national civic federation 

National Biscuit Company. 

NEW YORK. 1901. 

(1916) Employees are given an opportunity to invest 
their savings in the company's preferred stock upon the fol- 
lowing conditions: Application may be made for one share 
of stock by any employee and payments on the purchase price 
must be at the rate of $5 or a multiple thereof. Interest at 
4% is credited on these payments. When the stock is fully 
paid for, it is transferred to the employee, plus any excess 
of dividend declared in the meantime above 4% interest on 
the price paid by the company for the share of stock when 
purchased for the employee's account. Thereafter, all divi- 
dends are paid in full to the owner of the stock. 

If no payments are made for six consecutive months, 
or if the stock is not fully paid for within two years, the 
company may cancel the arrangement and refund the pay- 
ments actually made, with accrued interest. Employees de- 
siring to withdraw from the arrangement may have their 
payments returned with accrued interest, and employees who 
leave the company's service must either pay up the balance 
due on the share subscribed for or accept the amount to their 
credit in cash with interest. 

(1919) G. S. Wells, treasurer, September 5: 

"The stockholders' ownership arrangement with our em- 
ployees is still in full force and effect. The arrangement 
forms a closer tie between employer and employee, creates 
a deeper feeling of interest on the part of the employee in 
the success of co-operation. There has been little change in 
the number of employee stockholders since 1916 due to their 
investments in the various liberty loans, which we encouraged. 
All employees, without distinction, can acquire our stock on 
this plan. Our employees have in many instances expressed 
their appreciation of the plan, and have substantiated their 
appreciation by further subscriptions for our stock." 

National Cloak and Suit Company. 

NEW YORK. 1914. 

(1916) In June, 1914, the company discontinued a 
percentage of profits plan (a description of which will be 



PROFIT SHARING REPORT 235 

found under Abandoned Plans) and adopted a scheme de- 
signed to enable all those who were included under the old 
one, and a great many more, to become stockholders. 

To each employee included in the plan a certain number 
of shares is allotted, based on the importance of his position. 
The total allotment is spread over a period of five years and 
only one-fifth of the total can be taken up in any one year. 
The stock is allotted at a price of $25 per share, which can 
be paid for in monthly instalments. Any one paying for a 
year's allotment at one time will have a certificate of stock 
issued to him at once. Those who complete their year's pay- 
ment on the instalment plan will have their certificates issued 
to them after the twelfth payment. 

Each employee acquiring stock in this manner signs an 
agreement not to sell, lend, pledge or in any way dispose of 
the stock for five years. Any one leaving the employ of 
the company may retain such stock as has been fully paid 
for and issued, but forfeits any rights to stock allotted for 
subsequent years. The company agrees to turn over to his 
estate, without further payments, the stock allotted to any 
employee who shall die before the expiration of the allot- 
ment period. The company further agrees, when dividends 
are paid on this stock, to credit them to the stock for the 
benefit of the person to whom said stock has been allotted. 
No interest is charged on deferred payments until after divi- 
dends are paid. 

(1919) William Rosenbaum, secretary and treasurer, 

November 19: 

,4 We have no profit sharing plan. The bonus plan has 
not been changed. It is operated as follows: At the end 
of each three months we distribute to employees who have 
been with us during the entire period a bonus of from $5 
to $100, based primarily on the length of the employee's 
service with the company, and secondarily upon the efficiency 
records of the department in which the employee is engaged. 
In most instances the efficiency records consist of accuracy, 
cost per unit of work, time consumed in handling work and 
labor turnover. 

4 We rate (or weigh) each basis of efficiency according to 
its relative importance in that department. For example: 



236 THE NATIONAL CIVIC FEDERATION 

Accuracy, 50 points; cost per unit, 20; time schedule, 15; 
labor turnover, 15; total, 100. 

"At the beginning of each bonus period we supply to 
every department a statement showing its past efficiency rec- 
ords as well as the record we expect it to attain during the 
current bonus period. If the expected record is accomplished, 
the full amount of the bonus is paid. If not, a proportionate 
amount is paid according to the improvement made. 

"No employee is given more than 100% of his or her 
bonus but if the expected record of any one of the four bases 
is exceeded the additional points gained are applied to offset 
any deficit which may exist in one of the other three bases. 
An exception to this is, however, made in the case of 'cost,' 
for which no credit is allowed to a department for exceeding 
the expected record. This rule was established as a tem- 
porary safeguard against the possibility of the payroll of a 
department being lowered beyond reason." 

N. 0. Nelson Manufacturing Company. 

MANUFACTURERS OF PLUMBERS' AND MACHINISTS' SUPPLIES. 

ST. LOUIS, MO. 1886. 

(1916) From the net profits of the company, 6% is paid 
as interest on capital stock and from the remainder there 
is divided an equal percentage on the capital stock and on 
the wages of employees who have been with the company six 
months. The dividends to employees are allowed to accumu- 
late to their credit and are then finally paid to them in stock 
of the company. 

The plan, since adoption, has been changed slightly from 
time to time. After the panic of 1893 no dividends were 
paid for several years, because of general business conditions. 
When times became better, dividends were resumed and 4% 
allowed on the suspended years. 

To prevent employees from selling their stock, the com- 
pany only issues certi-icates after three years, and employees 
while in its service are forbidden to sell their stock. In meri- 
torious cases the company buys the stock itself from em- 
ployees desiring to realize on it in cash. 



PROFIT SHARING REPORT 237 

More than 1,000 employees participate and at present 
own about one-third of the capital stock. Mr. Nelson reports 
that "the plan has worked satisfactorily, has caused no 
trouble, and has undoubtedly increased the effectiveness and 
profits of the business." 

(1919) From a representative of the company, Septem- 
ber 9: 

"Our stock ownership plan is still in force. About 1,000 
employees participate. We have every feeling of confidence 
that in normal times the plan is fully appreciated by the large 
majority of our employees. Our plan takes in all employees 
from the president down, the only qualification being that 
a man must be with us six months before he participates, and 
he must be with us three years before he is presented with 
a stock certificate representing his profit sharing dividend 
for the three year period. Should he leave our employ before 
the end of the three years he loses his accumulated dividend. 
After having served three years he gets his profit sharing 
dividend for each year thereafter." 

New Haven Gas Light Company. 
new haven, conn. 1907. 

(1916) Each quarter there is credited to the account of 
every employee who had contracted to enter the profit sharing 
scheme 8% on the wages paid him for the preceding three 
months. This is at the same rate as the dividends paid to 
stockholders. All employees who have been with the com- 
pany one year, except executive officers, are eligible. 

When the amount credited to an employee equals the 
market value of one or more shares of stock in the company, 
a certificate representing such shares is transferred to the 
employee as his property, to keep or sell as he may elect. An 
employee may, if he desires, draw out in cash funds to his 
credit, instead of taking stock. In such case, he receives 
only one-half of the amount credited in his name. 

If employees are discharged for reasons other than drunk- 
enness, insubordination, crime or destruction of the com- 
pany's property, they receive their full balance. In the in- 
stances named, the balance is forfeited. Employees leaving 
of their own volition are paid one-half of the amount to their 



238 THE NATIONAL CIVIC FEDERATION 

credit, except when a woman leaves to marry, in which case 
she receives the full amount. 

The company reserves the right to refuse permission to 
enter into this contract to any employee who lacks interest in 
the company's welfare, and may also cancel an agreement 
already signed, upon one week's notice. 

The company has not found this scheme an unqualified 
success, as an increasing proportion of shares has been sold 
and turned into cash by the employees. There has, however, 
been a noticeable increase in interest and loyalty on the part 
of those retaining their stock. 

(1919) J. Arnold Norcross, treasurer, September 6: 

"Our stock ownership plan is still in force, but will not 
apply to any employees taken into the company after Feb- 
ruary 10, 1919. Our reason for limiting its further applica- 
tion was purely a question of necessary curtailment. The cost 
of the plan has doubled on account of the doubling of the 
wages, it has been still further increased by the shorter hours 
and consequent greater number of people employed and 
there is a still further proportionate increase on account of 
the falling off in the day's work of the average manual 
worker. These are not easy days for a public utility, and 
we therefore feel we must, temporarily at least, check the 
growth of this expense. 

"We have about 550 employees. 

"I cannot officially speak for the company as to our feel- 
ing toward the plan, but my own feeling is that it is a flat 
failure among the lowest grades of labor, and that happens 
to be the place where we are most troubled with discontent 
and unreasonable demands. The higher we go in the scale 
of intelligence and thrift the more the plan is appreciated. 
It is impossible to draw a line exactly defining where it is 
a success and where a failure because there are individual 
examples among all classes and individual examples of con- 
trary experience in the various grades of employees. I 
should say, therefore, that the plan had tended to keep more 
contentment among the best of our employees and had had 
no effect on the worst." 

The companv issues a pamphlet describing its plan in 
full. 



profit sharing report 239 

The Norwalk Tire and Rubber Company. 

norwalk, conn. 

(1919) D. Spence, vice-president, November 21: 

"We have so far refrained from undertaking any general 
plan of profit sharing. We have been content to recognize a 
number of our most deserving employees by assigning to 
them stock, from time to time, in this corporation. It is our 
intention and wish, however, to go further in this matter in 
the course of time." 

Parke, Davis & Co. 

MANUFACTURERS OF DRUGS. DETROIT, MICH. 1902. 

(1916) The company has twice allotted to employees 
4,000 shares of its stock. The par value of the stock is $25, 
but the company sold it to the employees at a low book value 
and practically loaned the subscribers the purchase money 
for five years at 5% interest. The first 4,000 shares were 
distributed principally to the executive staff, and the second 
4,000 to the traveling salesmen and valuable subordinates in 
the laboratories and offices. 

A great majority of the beneficiaries have paid for their 
stock and may have purchased more at the market price. 
Between 500 and 600 of the company's 3,500 employees 
are stockholders. Approximately one-half the stockholders 
of the company are employees. The company states: 

"We consider both operations an unqualified success. 
They have beyond question stimulated the loyalty and de- 
votion of our employees; very few have left us to go to 
competition, whereas in years gone by, our establishment 
was a veritable nursery or training-school maintained 
largely for the benefit of our competitors." 

(1919) Frank G. Ryan, president, October 9: 

"The stock ownership plan is still in force, with apparently 
good results. We have an average of 2,500 employees, with 
about 800 who have participated in stock allotments. The 
feeling of employees toward this plan is very satisfactory, 
and we believe it has modified the tendency toward labor 



240 THE NATIONAL CIVIC FEDERATION 

troubles. The allotment of stock is not limited to heads of 
departments, but does include the rank and file. 

4 We cannot say that we regard it unqualifiedly as a 
success. We believe our plan will continue to be a success 
so long as our business is successful. Should the business 
meet with reverses and our stock depreciate in value we would 
expect much dissatisfaction among those who have purchased 
the stock according to our plan. In our opinion any plan 
of profit sharing or stock allotment can only be successful 
if the business of the corporation is successful: employees 
are not likely to share losses in business willingly, however 
grateful they are to share the profits." 

Pickands, Mather & Co. 

STEAMSHIP INTERESTS. CLEVELAND, OHIO. 1914. 

(1916) The company holds in trust 2,500 shares of its 
stock, which may be purchased by masters and engineers at 
par, each master being permitted to buy from one to eight 
shares a year and each chief engineer from one to five. 
Payments must be made in monthly instalments in such 
amounts as the subscriber fixes, except that stock must be 
paid up in three years. Interest at 5% is charged on deferred 
payments. Dividends are credited as payments on stock. 
Three hundred extra shares were set aside for distribution, 
without cost, among those subscribers retaining their shares 
until 1920. 

The company states that it does not regard the system as 
strictly profit sharing, but "it is more the plan of getting our 
chief navigating officers, that is, the masters and engineers, 
interested in our property." 

(1916) From a representative of the company, Oc- 
tober 31: 

'We have not installed any plan except that of 1913. We 
consider this has been a great success to the men receiving 
the benefits of it; in fact it has helped our whole organiza- 
tion." 



profit sharing report 241 

Pittsburgh Coal Company, 
pittsburgh, pa. 1900. 

(1916) Employees are permitted to purchase common 
or preferred stock of the company upon monthly payments 
of not less than $1 per share. These payments are made to 
the Pittsburgh Coal Company's Employees' Association, 
which invests the funds as they accumulate in stock of the 
company at the market price and holds same for delivery to 
the purchasers when their subscriptions are complete. 

Employees who pay in more than $1 per month are 
credited with 5% interest on the excess. When all the pay- 
ments on stock subscribed for during any one month, plus 
dividends and other earnings accrued thereon, equal the 
average cost of all the stock purchased for the account of the 
subscribers of that month, the association delivers the stock 
to the subscribers. A subscriber who leaves the company's 
service may, if he chooses, keep up his payments until his 
purchase contract is completed. Those who default in the 
payment of any of the monthly instalments are charged in- 
terest at 6% on the arrears, and if the default continues three 
months or more the association may cancel the contract and 
return the subscriber's deposits with interest at 5%. The 
privilege of withdrawing deposits with interest at 5% is open 
to subscribers who wish at any time to cancel their contracts. 

During the first nine months of the operation of the plan 
234 employees became owners of 2,460 shares i)f the com- 
pany's stock, at an average cost to the purchasers of $41.36 
per share. The latest report of the employees' association, 
October, 1915, shows 5,718 shares paid for and delivered 
and 6,414 shares under contract for delivery upon completion 
of the payments. Analysis of the tables showing the dis- 
tribution of the stock indicates that of the 6,414 shares under 
contract 5,236 stood in the names of thirty-nine superin- 
tendents and one foreman, the remaining 1,178 shares being 
distributed among sixteen subsidiary companies, whether in 
the names of officers or workingmen does not appear. For 
a number of years no dividends were paid on the preferred 
stock of the company, which accordingly reduced the number 
of employees who entered upon stock purchase contracts. 



242 THE NATIONAL CIVIC FEDERATION 

(1919) J. B. L. Hornberger, vice president-comptroller, 
writes, September 8: 

"Our employees' stock purchase plan, conducted through 
the Pittsburgh Coal Company Employees' Association, has 
been continued with satisfactory results, and the outlook at 
the present time is for an expansion of the work looking to 
the enrolment of a large percentage of our employees as 
stockholders. At this time, upward of 15% of our employees 
are stockholders of the company or are purchasing stock 
through the employees' association. This percentage has 
grown steadily during recent years and we have good reason 
to believe that it will continue to grow. 

'The plan effectively reaches and holds the thrifty classes 
of employees of the company and inculcates and encourages 
thrift among many who are not naturally so disposed; in 
this way building up and strengthening the very fibre of the 
company's organization. It is a leaven quietly overcoming 
radicalism and class hatred." 

Mr. Hornberger also writes, November 29: 

,4 The Board of Directors has authorized a special distri- 
bution to be made as of December 1, 1919, and each year 
thereafter, until changed or withdrawn, of $1 per share on 
all of the company's stock owned at such time by employees 
of the company which was purchased through the employ ees* 
association. This, of course, is in furtherance of the policy 
of the company to encourage its employees to save money 
and become partners in the business. 

'While our plan has not, up to this time, involved large 
bonuses from the company, and may not be properly classi- 
fiable as a profit sharing plan, yet we believe that the prin- 
ciple followed is along correct lines, which may in the future 
be extended with great mutual profit." 

Printed matter issued by the company describes its plans. 

Pittsburg, Butler and Harmony Consolidated Railway 

and Power Company. 

pittsburg, pa. 

(1920) A press dispatch on March 19 states that one 
million dollars worth of common stock, three directors and 
establishment of an old age pension and sick fund is the gift 



PROFIT SHARING REPORT 243 

to more than 400 motormen, conductors and other employees 
of the Pittsburg, Butler and Harmony Consolidated Railway 
and Power Company and its subsidiaries, according to the 
announcement of David I. McCahill, president. 

Employees of the company were called together at Butler 
and told of the president's plan, explained thus: 

One million dollars face value of the common stock of the 
company is to be set aside under a trust agreement with some 
bank or trust company. Certificates representing the stock 
are to be issued to the employees.. The fund which would 
result from the accrued dividends is to be divided equally 
among all the employees, so that each employee would be 
interested in holding down the number of employees to as 
few as possible because the greater the number. the less the 
amount each would receive. 

In event an employee dies while in the service of the 
company his widow during her lifetime and after her death 
any minor children would be entitled to his share in the fund. 
The right to vote the common stock remains with Mr. Mc- 
Cahill, but in order that the employees might have represen- 
tation even greater than that which voting power would give 
them they are to have not less than three directors on the 
Harmony and the Mars board, these directors to be selected 
by the men themselves, according to rules they may adopt. 

The Procter and Gamble Company, 
soap manufacturers. cincinnati, ohio. 1887. 

(1916) In the year 1903 a plan for dividends through 
stock ownership was inaugurated. This, with slight modi- 
fications, is in effect at the present time, and is regarded by 
the company, so far as its business is concerned, as an un- 
qualified success. The company reserves the right to termin- 
ate the plan at the end of any fiscal year. 

Employees earning not more than $1,500 per year (ex- 
cept salesmen and traveling representatives) may upon ap- 
plication have common stock of the company purchased for 
their account at the market price, to an amount equal to 
their annual wages. This stock is held for their bene it by 
three trustees appointed by the directors of the company. 
A subscribing employee pays at the time of purchase 2%% 



244 THE NATIONAL CIVIC FEDERATION 

of the cost of the stock and not less than 4% additional each 
year until the subscription is complete. Interest at 3% per 
annum is charged on unpaid balances. 

Dividends on the stock are credited to the purchase ac- 
count, and in addition each subscriber receives a trust 
receipt, guaranteeing to the holder dividends at the rate of 
16% per annum upon the wages actually earned, provided 
he has been at least six months continuously in the service. 
These trust receipt dividends are credited toward the pur- 
chase price of the stock. 

Employees in the service five and ten years may increase 
their subscriptions respectively to 125% and 150% of their 
annual wages, and receive trust receipt dividends of 20% in 
the one case and 24% in the other. Employees whose wages 
are raised may increase their subscriptions to an annual wage 
increase. Employees whose wages increase beyond $1,500 
per annum may, under certain conditions, retain their stock. 

Employees who wish to withdraw from the plan in less 
than two years after subscribing for stock, or before 35% 
of its purchase price has been credited to their account, are 
entitled only to a refund of the actual amount of cash they 
have paid in. Employees leaving after two years, and after 
their credit has reached 35% of the purchase price of the 
stock, may withdraw their cash payments plus all dividends 
that have been credited to their account, provided they have 
not increased their payments by more than 5% of their sub- 
scription within the two preceding months in order to secure 
this withdrawal privilege. Written notice of withdrawal must 
be given. Settlement is made with employees who resign 
or are discharged on the basis of the status of their accounts 
at the date of termination. In payments to estates in case of 
death the benefit of any increase in market value is given. 
Increased value accrues to those withdrawing only in event 
subscription has been paid in full. A guarantee is given 
against loss to participants in case of decline in market value. 

It is reported that employees now own more than 
$1,600,000 worth of stock of the company. As the plan 
works out, a subscription for say $1,000 worth of stock is 
fully paid for in about four years and becomes the absolute 
property of the subscriber. 



PROFIT SHARING REPORT 245 

The first profit sharing experiment of the company was 
simply a semi-annual distribution of cash at a certain per- 
centage, proportionate to the employee's wages, the rate of 
dividend being fixed each year and based upon the current 
earnings of the firm. 

After the incorporation of the company, in 1890, this 
plan continued, and the rate of profit sharing dividend con- 
formed to the annual rate of dividend upon the common stock 
of the company. 

At first the profit sharing plan was extended to all 
employees, but soon was restricted to those whose wages were 
$1,500 per annum or less. It was abandoned for the reason 
that nothing was accomplished toward stimulating the em- 
ployees to greater effort. Very little of the extra cash was 
saved and the recipients came to look upon the dividends 
as a regular part of their incomes, and as a justification for 
extravagance or dissipation. 

(1919) L. S. Bitner, service, superintendent, Novem- 
ber 14: 

"Our profit sharing plan has been revised since its de- 
scription in 1916, and on July 1, 1919, a new plan was put 
into operation. This revision was made because it was felt 
that the old plan was getting 'top heavy' and that too large 
a proportion of the employees' earnings was being paid to 
them in the way of 'profits.' Also, there was no graduated 
increase on account of length of service in the old plan, 
which we consider to be a desirable feature. The wage limit 
of $1,500 per year has been increased to $2,000 under the 
new plan, which means that every employee of this company 
on the wage roll can be a participant in the profit sharing 
plan, as the $2,000 limit includes men up to 86 cents per 
hour. 

"The average number of employees of this company ap- 
proximates 7,000 at all plants except the eleven mills of 
the Buckeye Cotton Oil Company (a subsidiary). Of this 
number, approximately 60% are now profit sharers. We 
can safely predict that an 85% participation will be ac- 
complished by January 1, 1920. This will mean really 
100% participation on account of the unavoidable labor 
turnover occuring in the class of employees who do not stay 
long enough to become what we term 'regular' employees. 



246 THE NATIONAL CIVIC FEDERATION 

'The revision of the profit sharing plan has met with 
100% approval on the part of our employees. We believe 
that the 32 years of profit sharing which this company has 
experienced has done a great deal toward eliminating labor 
troubles, quieting unrest and building up a stable body of 
satisfied employees. 

"Our profit sharing plan was first installed in 1887. It 
has been continuously in operation since that time, although 
the method of participation has been changed several times. 
'We believe that the operation of the plan has been a 
success. In fact, it is often quoted as being one of the out- 
standing examples of successful profit sharing, chiefly because 
it has been in operation for a comparatively long time." 

A company booklet gives details of the revised plan. 

Public Service Corporation of New Jersey. 
NEWARK, n. j. 1913. 

(1916) The company purchased 3,000 shares of its 
stock in the open market and sold it to its employees upon 
the instalment plan. Instalments could be as low as $1.50 a 
month, at which rate a subscription for one share would be 
completed in about six years. Stock cannot be disposed of 
until fully paid for except with the consent of the welfare 
committee. Employees are also allowed to buy stock out- 
right on condition that it be held three years. The company 
is convinced that the plan is successful, from the fact that 
the allotment was considerably over-subscribed. 

(1919) Dudley Farrand, assistant to the president, 
writes, December 24: 

'This company has a welfare plan covering sick benefits, 
pensions and insurance, which has been in effect since Jan- 
uary 1, 1911. We have, however, no profit sharing plan in 
the broad sense of the term. It is true that a number of 
our employees are stockholders in the company, and some 
of this stock was acquired on deferred payments, under ar- 
rangements we were able to effect with a trust company before 
the war, but owing to the extreme burden which has been 
thrust on all utilities by reason of increased operating costs 
the plan is not now operative except as to those who have 
not yet completed payments. As a matter of fact, we do not 



PROFIT SHARING REPORT 247 

know of any public utility which is able to offer a profit 
sharing plan under present conditions." 

Rand, McNally & Co. 

PUBLISHING AND PRINTING. CHICAGO, ILL. 1879. 

(1916) In 1879 the company began to interest the fore- 
men and heads of departments in the business by distributing 
among them shares at par value, the terms of payment 
(largely out of dividends) being made easy; no man could 
hold over ten shares. This plan working well, the firm in 
1886 admitted to its benefits the older and more skilful work- 
men. 

H. B. Clow, the president, wrote March 23, 1916: 
'Then the stock was available for that purpose. It could 
be purchased by the company and sold to the employees at 
par. But at the present time there is no treasury stock avail- 
able and the only stock that can be used for this purpose is 
that which can be purchased in the open market by the com- 
pany and resold to employees at the purchase price. We 
still favor such purchases by our employees and the^e is 
now no limit as to the amount of stock they may secure." 
(1919) H, B. Clow, president, October 9: 
'We do not have a profit sharing plan and never did, 
although at one time we permitted employees to buy stock 
in the company at a fixed price and on easy payments." 

Republic Iron and Steel Company. 

NEW YORK. 

(1916) This company maintains a stock subscription 
plan very similar to that of the United States Steel Corpora- 
tion, but applying only to heads of departments. No detailed 
description of the system has been issued. 

(1919) John A. Topping, chairman, October 8: 
"Our general profit sharing plan reported to you in 1916 
is still in effect in principle, the only changes made being of 
minor detail. It affects about 300 employees, or reaches 
down to heads of departments and foremen, including those 
only who are directly responsible for profits and losses. In 
other words, it is a modification of the plan adopted by the 



248 THE NATIONAL CIVIC FEDERATION 

Lnited States Steel Corporation, and involves both cash and 
stock settlements. Inasmuch as the plan affects only salaried 
workers, or the grade of foremen and higher officials, it has 
no effect whatever on strikes. In the opinion of the writer, 
profit sharing cannot be successfully applied to the rank and 
file of steel workers. One very great difficulty in working 
out any co-operative scheme among the rank and file is the 
fact that about 70% of these workers are foreign-born, but 
few can either read or write English and the great majority 
can neither read nor write their own language. They, of 
course, are ignorant and suspicious. 

"I do not think that any of the steel companies extend 
their profit sharing plan below the line that we reach. The 
offerings in stock, however, by some of the steel companies 
has been extended to workmen, but that is not the case in 
our company. I believe, however, that the sale of stock to 
any employee is a desirable policy to promote, as the en- 
couragement of stock purchasing among the general em- 
ployees, undoubtedly has a stabilizing influence." 

Roycroft Shop, 
printers, bookbinders and makers of art products. 

east aurora, n. y. 

(1916) While not operating what can be strictly de- 
fined as a profit sharing system, Mr. Hubbard's plan in- 
cluded the sale of stock to employees, upon which a high 
rate of interest was paid. Mr. Hubbard stated in May, 1915: 

"As a general proposition, our conclusion regarding 
any profit sharing scheme is that unless it can be so ar- 
ranged that the employee feels he is getting this par- 
ticular benefit through his own effort (and that unless he 
puts forth an effort he won't get it), there can be no com- 
plete success to the scheme. Something that is given for 
nothing is not appreciated." 

(1919) From a representative, October 29: 
"The report of our company in regard to its profit sharing 
plan which you have heretofore published is 0. K. for re- 
publication. We have no suggestions or alterations to make," 



profit sharing report 249 

Shaft-Pierce Shoe Company, 
faribault, minn. 

(1919) W. S. Shaft, president, November 20: 

'We are operating under a stock ownership plan of profit 
sharing. For several years the heads of departments have 
been owners of stock in this business, but recently we have 
sold small, medium and rather large blocks of the (common 
or voting) stock to the rank and file of our employees. Our 
average number of employees is upward of 250. It has put 
new interest in their work and a desire to economize on time 
and materials. 

"Our plan puts fully 50% of the company employees, 
from the night watchman to the president of the company, on 
exactly the same basis from standpoint of profit sharing. 
The stock is sold to all at the same price per share, each 
share has a vote and each participate in the profits in exactly 
the same manner, share for share alike. We arranged with 
our bankers to finance those who felt the need of it, so that 
the stock is paid for when issued, but they are given reason- 
able time to meet the bank loan. 

'We have had no labor troubles during the past fifteen 
years, but have felt a desire for closer co-operation of our 
employees toward the business, and closer personal contact 
by the executives and the men behind the guns. We think it 
a good move, our bankers approve of the plan and our out- 
side stockholders are delighted with the idea. 

"In addition, we some time ago purchased insurance on 
all employees grouped together. The premiums are borne 
wholly by the company. These policies range from $500 to 
$2,000 on each person according to the length of their em- 
ployment by us." 

Studebaker Corporation, 
south bend, ind. 1913. 

(1916) The employees who share in the profits include 
only executive officers, important clerks and foremen. These 
are divided into four groups, the more important of the em- 
ployees receiving a greater percentage. 



250 THE NATIONAL CIVIC FEDERATION 

The profit sharing fund is estimated as follows : 

Out of the net profits 7% is paid upon the preferred 
stock; 5% upon the common stock, and a certain sum is set 
aside for the special surplus account for the amortization of 
the preferred stock. Then 12% of the balance of the profits 
remaining up to $1,000,000; 14% of such balance in excess 
of $1,000,000 and up to $2,000,000, and 15% of such excess 
over $2,000,000 constitute the profit sharing fund. Pay- 
ments to the first three classes are made in 50% common 
stock and 50% cash, while payments to the fourth class, 
which includes the foremen, chief clerks, etc., are made in 
cash only. 

The stock is delivered in instalments, 25% after the first 
year, 25% after the second year and 50% after the third 
year. Any dividends accruing are promptly paid the partici- 
pants. Employees who resign during the year lose all right 
to share in the profits of that year, and forfeit to the company 
20% of the common stock held for their account from the 
bonus of the previous year. 

The company reports: ''We find it very satisfactory." 

(1919) The assistant to the president writes, Novem- 
ber 10: 

"On August 5 of this year we adopted certain co-opera- 
tive plans. These are, in effect, dividends on continuous 
service which, when rendered by employees, becomes a mate- 
rial contribution toward the successful conduct of our busi- 
ness. Included therein are the economies of a reduced labor 
turnover, and the rise in standards and quality which are 
bound to result from the skill which comes with familiarity 
with responsibilities and duties. 

"The cost of these co-operative plans are fixed charges of 
the business and are therefore in the nature of dividends pre- 
ferred. The plans contemplate a definite compensation or 
reward for specific services rendered, or conditions fulfilled, 
and in this respect are prior obligations on the fruits of the 
business. 

"Although these co-operative plans have been in effect 
but two and one-half months, the results thus far obtained 
are highly satisfactory and justify their initiation. Of 3,600 
employees in our South Bend works, 30% have participated 
in the stock purchase plan. In Detroit, where we employ 



PROFIT SHARING REPORT 251 

6,000 men, this percentage is 6, due to the fact that up to this 
time the efforts of our co-operative department to place the 
advantages of participation before our employees have been 
confined entirely to the South Bend works. 

"Our anniversary check plan, which is a liberalization of 
one in effect for the past three years, has, through previous 
experience, demonstrated its value. Likewise the pension 
plan, which is a liberalization of one heretofore in existence; 
it carries an intangible benefit and discharges an obligation 
which requires no comment. 

"Our vacation plan, under which factory employees 
and all wage workers receive annual vacations with pay, is, 
so far as we know, a plan not up to this time adopted by any 
other large manufacturer. The vacation plan was very for- 
tunate in its conception and has without doubt made an ex- 
ceedingly strong appeal to our men. They have appreciated 
it to a remarkable degree and in such a manner as to justify 
it without doubt. 

"In addition to the co-operative plans above referred to, 
we have for the past five years distributed a percentage of 
our profits to certain important officers and employees who by 
reason of their respective positions have contributed in a 
large measure toward the success of the organization. This 
direct profit sharing has been confined to managers of de- 
partments, superintendents, etc., and from year to year has 
undergone changes with the idea of increasing its effective- 
ness. It is now in the process of revision and we shall be 
glad to advise you of its scope and character so soon as these 
revisions are completed." 

As described in the company's booklet on the subject, the 
main provisions of the profit sharing plan are: 

"Employees who have been in the service of the cor- 
poration for three months or more, may have common or 
preferred stock purchased for them by the corporation for 
their account in amounts limited each year to 20% of their 
annual earnings, and to $400 market value of stock at the 
time of purchase. 

"Applications for purchase of stock must be accom- 
panied by an initial payment of 10% of. the estimated 
purchase price, and the remaining 40% thereof, which 
is payable by employees, must be paid in four years in 
instalments of one-fifteenth of the amount every three 
months after the date of purchase. 



252 THE NATIONAL CIVIC FEDERATION 

"The corporation will fully absorb the remaining 50% 
of the cost of the stock (provided employees keep up 
their payments and remain in its service continuously for 
four years) by crediting employees' accounts every three 
months with one-sixteenth of its half of the cost of stock 
purchased. 

"All stock purchased under this plan will be charged 
to employees' accounts at cost, and 4% interest will be 
charged quarterly on the unpaid balance of the purchase 
price, after deducting payments by employees, and credits 
by the corporation. All cash dividends (and stock divi- 
dends paid on the common stock) will be credited to the 
accounts of employees and the excess of dividend credits 
over interest charges will act as a reduction in the amount 
of the final payment to be made by employees in the last 
year. 

"Stock certificates purchased for the account of em- 
ployees will be held by the corporation in its name until 
the expiration of the fourth year when, if payments are 
completed, they will be delivered to employees. In the 
meantime voting proxies will be given to employees in 
advance of all stockholders' meetings in order that they 
may vote the stock held for their account in the election 
of directors. 

"If and when 20,000 shares of common stock are pur- 
chased and held by or for employees under this plan, the 
directors will recommend to the stockholders' meeting, 
the election, as a director of a representative of employee 
stockholders, which representative shall be nominated by 
employee stockholders in an election held for this 
purpose." 

Swift & Co. 

MEAT PACKERS. CHICAGO, ILL. 1904. 

(1916) The company purchases its stock on the market 
for an employee when so requested, on an initial payment of 
10%, taking his note for the balance, bearing 6% interest, 
the dividends going to the employee. No restrictions are 
placed upon the sale of the stock purchased by an employee, 
and the company does not pay any bonus in addition to the 
regular dividends. 

About 3,500 of the 35,000 employees are stockholders. 
Most of these are office employees, managers, salesmen, 
superintendents and foremen. The rank and file of the work- 
men do not participate to any extent. 



PROFIT SHARING REPORT 253 

(1919) F. S. Hayward, secretary, November 17: 
''We have a stock ownership plan in operation and have 
had for a number of years. A good percentage of our em- 
ployees have taken advantage of our stock ownership plan. 
It is impossible, however, to state definitely the results ob- 
tained through this proposition in respect to modifying the 
tendency toward labor troubles, but we feel that it is both 
beneficial to the employee and the company. Our plan is 
not limited to heads of departments but is open to all em- 
ployees, who have been in continuous service for six months 
or more, the idea being to assist the employees in saving and 
investing their money, in which respect we feel the plan has 
been successful." 

A circular, May 19, 1919, announced: 

"To encourage saving on the part of its employees and 
. willi the particular purpose of interesting in Swift and 
Company stock those employees who are not now share- 
holders, especially the plant employees, the directors of 
Swift and Company have decided to sell a portion of the 
Swift and Company stock held in the treasury to employees 
at $100 per share. This offer is open to all employees, 
whether they are shareholders or not. In order to partici- 
pate in this plan, employees must have been in the service 
continuously for not less than six months, but employees 
who have been absent with the colors are considered as 
having been in continuous service. Amount of stock to be 
allotted to each employee will be fixed according to wage 
or salary, ranging from one (1) to five (5) shares, as fol- 
lows: Weekly wage or salary up to $20, 1 share; $20 and 
up to $30, 2 shares; $30 and up to $40, 3 shares; $40 and 
up to $50, 4 shares; $50 and over, 5 shares.'* 

Swift and Company has recently established a department 
of employees' relations under the direction of John Calder. 
It will be the 'chief object of this department to cultivate and 
further develop the human element in the business. There 
are now 23,000 employees who have shown their interest in 
the company by subscribing for its shares. The employees 5 
benefit association, which last year took care of 9,100 persons 
and paid benefits amounting to $398,000, and the pension 
fund and various social activities. 



254 the national civic federation 

Todd Shipyard Corporation. 

NEW YORK. 

• 

(1919) William H. Todd, president, November 11: 

"We have stock ownership plan in operation among our 
employees in all subsidiary plants of the Todd Shipyards 
Corporation. Plan was installed July, 1916, and is still in 
operation. At Robins Dry Dock and Repair Company plant, 
for instance, the average number of employees is 4,500, with 
approximately 900 employees participating in stock owner- 
ship plan under agreement No. 1, dated July, 1916. We 
anticipate allotting 1,500 shares in the very near future to 
the steady employees of Robins Dry Dock and Repair Com- 
pany plant, one to each employee, under agreement No. 2, 
dated October, 1917. This procedure will apply to all our 
companies. 

'The feeling toward the plan is whole hearted, in view 
of the fact that the corporation allots a share of stock without 
any expense to the employee, who becomes owner of stock 
upon same reaching maturity according to agreement and 
receives dividends from date of allotment. 

''We have built and maintain athletic fields that are under 
the direct supervision of our employees who, indulge in all 
kinds of outdoor sports." 

Union Switch and Signal Company, 
swissvale, pa. 1911. 

(1916) The common stock is offered to all employees 
except directors and general executive officers at $75 a share. 
Payments must be made in monthly instalments of not less 
than 2% of the value of the stock, and subscriptions must be 
completed in fifty months. Dividends are credited on the 
stock after 24% of its value has been paid in. If the em- 
ployee leaves his stock with the company after it has been 
fully paid up, he receives in addition to the regular dividend 
an extra $5 per share for every year he remains with the 
company until $25 has been paid on each share, thereby 
reducing its actual cost to $50 per share. During the first 
four years under this offer, 1,956 shares were sold to 450 
employees, and the company considers the plan a success. 



PROFIT SHARING REPORT 255 

(1919) A. L. Humphrey, president, December 16: 
"In 1911 the company allotted 2,000 $50 shares of its 
-common stock for subscription from employees, grouped 
in three classes according to wages earned. The privilege 
was extended to all the employees, except directors and gen- 
eral executive officers, and the right to subscribe expired in 
a limited period, about sixty days. The price was $75 for 
each $50 share, payment being required at the rate of not 
less than 2% per month. All dividends were credited to 
the subscriber after payment of 24% of the purchase price. 
When the stock had been fully paid for, it was optional with 
the purchaser to accept the regular stock certificate or a so- 
called 'participation certificate.' The latter was non-trans- 
ferable, but entitled the holder for a period of five years 
to a participation dividend of $5 per share per year in addi- 
tion to the ordinary dividends. At the end of five years 
(in which time the difference of $25 per share between the 
par value of the stock and the price paid by the subscriber 
nad been returned in participation dividends) the participa- 
tion certificate was exchanged for an ordinary stock certifi- 
cate. This exchange could be effected earlier but in such 
case the bonus was forfeited. After payments on the stock 
had been completed, the owner, whether holding a participa- 
tion certificate or a regular stock certificate, was entitled 
to vote the stock, but in the case of a participation certificate 
holder the vote was exercised through the treasurer of the 
company, who held the stock in trust. 

"At the time the plan was instituted the company's em- 
ployees numbered about 2,300, of which 642 became sub- 
scribers for a total of 2,758 shares, the original allotment 
of 2,000 shares being necessarily increased to provide for 
the over-subscriptions. The five-year period on the few re- 
maining unmatured agreements will expire with the current 
year 1919, and there will have been issued under the plan 
2,366 shares to 523 subscribers, the difference of 392 shares 
and 119 subscriptions being explained by lapsed agreements. 
'The plan was adopted by Mr. Westinghouse, no doubt, 
with the hope and aim that through its operation there would 
be developed on the part of employees a conscious sense of 
their partnership in and identity with the affairs of the com- 
pany, coupled with a desire on his part to sow the seeds of 



256 THE NATIONAL CIVIC FEDERATION 

thrift and the habit of saving; and the further desire to 
reward the responsive by enabling them to secure what was 
believed and has proven to be an unusually profitable invest- 
ment. No doubt, also, Mr. Westinghouse had in mind the 
advantages to the company in a body of loyal and contented 
employees, with a realizing sense of the interdependence of 
their own prosperity with that of the company and all that 
this would mean in minimizing labor troubles. 

"While there is room for some difference of opinion as 
to the effectiveness of the plan, it is probably safe to say that 
the desired results were in a considerable measure achieved. 
Whether such a plan would justify itself under present con- 
ditions is another question." 

(1919) T. S. Grubbs, vice-president, September 9: 

'Under the plan the annual return of premium did not 
commence until final payments for the stock had been made, 
and there are accordingly some transactions which have not 
been completed, i.e., the trustee is holding stock for the pur- 
chasers, and the final repayment of bonus with delivery of 
the stock will not take place until as late as January 1, 1921. 
The stock now held by the trustee is not Union Switch and 
Signal Company capital stock, but shares of the Westinghouse 
Air Brake Company into which the United Switch and Signal 
Company stock has been converted, the Air Brake Company 
having exchanged its shares for stock of the Union Switch 
and Signal Company and now owning over 99% of the out- 
standing stock of the Union Switch and Signal Company. 

''While there is room for some difference of opinion as 
to the effectiveness of our plan, it is probably safe to say 
that the desired results were, in a considerable measure, 
achieved, particularly with respect to labor troubles; al- 
though, as a matter of fact, there have been two strikes on 
the part of our employees since the allotment of stock, but 
we feel that these strikes were almost purely sympathetic. 
Whether such a plan would justify itself under present con- 
ditions is a question, and so far as the writer knows no con- 
sideration is being given by the management at this time 
to a further allotment of stock under this plan. An industrial 
relationship committee has recently been formed among our 
employees, upon the suggestion of the management, and the 
latter feels that such agency promises the most effective 



PROFIT SHARING REPORT 257 

results in establishing and maintaining the best relationship 
between the company and its employees." 

(1919) 0. W. Buentling, manager of works, Novem- 
ber 13: 

"We have a relief department and a pension system on 
a very liberal scale; and also, in case of death of an em- 
ployee who has been in the service of the company for two 
years or more, a system of monthly payments amounting 
to 30% to his widow during widowhood and for two years 
after remarriage, as well as 10% additional for each child 
under 16 years of age, up to a total of 60% of wages or 
salary, based on not more than $100 per month." 

United States Rubber Company. 

NEW YORK. 1912. 

(1916) A certain sum is set aside each year for distri- 
bution among such officers and employees of the company as 
are selected by the executive committee. Those employees 
whose salaries are over $5,000 receive 60% of their share 
in cash and the remainder in conditional certificates of in- 
terest in the common stock of the company on the basis of 
$50 a share. All other employees receive their portion of 
the distribution in cash. 

Participants receiving stock who remain with the company 
until 1920 and render satisfactory service until that time 
will receive the stock called for by the conditional certificates. 
During this period employees receive all dividends declared 
on the stock held for their account. In the event of leaving 
the company or being discharged such participants forfeit 
all right to the stock, which goes into a fund to be distributed 
among those participating officers and employees who remain 
throughout the period stated. 

There is also a stock subscription plan, under which the 
officers and employees who receive wages above $1,300 are 
permitted to subscribe for shares of common stock at $50 
a share. The maximum amount for which an employee may 
subscribe is determined by the executive committee, varying 
according to his salary and position. At least $5 must be 
paid monthly on each share. Interest at 5% is charged on all 
unpaid balances. 



258 THE NATIONAL CIVIC FEDERATION 

All dividends paid on the stock are credited to the account 
of the subscriber until the stock is fully paid and issued to 
him. If the subscription is canceled before the stock is fully 
paid for, the exact amount of payments will be returned with 
5% interest, no credit being given for dividends and no in- 
terest being charged on deferred payments. 

To induce employees to keep their stock for at least five 
consecutive years, the company makes a cash payment of $3 
a share for each of the five years. Upon retaining stock for 
that period and remaining in the service of the company, the 
latter pays still further compensation from a special fund 
made up of forfeited stock, which is also credited with 5% 
interest. 

(1919) John D. Carberry, assistant secretary, Oc- 
tober 9: 

'The profit sharing plan of this company has not been 
changed since its adoption in 1912. All employees who are 
receiving $25 per week or over are eligible to subscribe to 
the common stock. Those who receive $10,000 per annum 
or over participate in the plan upon the $10,000 basis and 
no more. 

'The plan has been beneficial to both employer and em- 
ployee. The average number of employees participating at 
the present time is approximately 3,500." 

The United States Steel Corporation. 
new YORK. 1903. 

(1916) Under this plan, the employee purchases stock 
in the employing corporation, pays for the same in instal- 
ments, and, in addition to the regular dividends, receives a 
bonus of so many dollars per share in consideration of his 
not disposing of the stock or leaving the company's employ 
for a certain fixed period of time. 

A number of the largest companies in the country have 
adopted this plan. The United States Steel Corporation has 
used it longer than has any other company and its scheme 
seems to be the model in this field. Other companies which 
have closely followed its plan are: 



PROFIT SHARING REPORT 259 

United States Rubber Company; 

National Carbon Company; 

Union Switch and Signal Company; 

International Nickel Company; and 

American Telephone and Telegraph Company. 

Some of the essential features of the Steel Corporation 
plan are: 

Every year the corporation offers preferred and com- 
mon stock for sale to its officers and employees at cost 
slightly below the market value. 

Subscriptions are paid in monthly instalments, to be 
not less than $2.50 per share for preferred stock and $1.50 
per share for common stock. No instalment can exceed 
25% of the month's salary. Interest at 5% is charged on 
deferred payments. 

All dividends are credited to the account of the sub- 
scriber, and the total of payments and dividends must fully 
pay for the stock within three years. 

To induce the employee to keep the stock after it is 
fully paid up and delivered to him, a bonus of $5 for each 
preferred share and a bonus of $3.50 (increased to $5 in 
1916 subscription) for each common share are paid to the 
employee at the end of each year upon presentation by him 
of the certificate of stock to the treasurer of the company. 
This continues for live years. 

Non-paid-up subscriptions may be canceled, and the 
money which has been paid in is refunded to the employee 
with 5% interest. Premiums are not paid to employees who 
cancel their subscriptions, sell their stock or leave the em- 
ploy of the company. An official of the company states thatr 
"If there is a large advance in the market price he may figure 
that more money will be made by selling it than holding for 
the special fund." 

The forfeited or unpaid premiums are kept in a fund and 
divided pro rata among the remaining shareholders under 
this plan at the end of the five-year period. For the first live- 
year term this fund amounted to $65.04 per share; a notable 
"bonanza" for the remaining stockholders, it is true, although 
revealing on the other hand, the large proportion of with- 
drawals and cancellations which must have taken place dur- 
ing that period. The end of the second five-year period 
showed a special bonus of a little over $19 per share and has 
been about the same each year since. 



260 THE NATIONAL CIVIC FEDERATION 

In the event of the death of an employee who has sub- 
scribed for stock and made payments under this plan, his 
estate receives the unpaid premiums for the full five-year 
period and a pro rata share of the undivided premiums at 
the time of his death. 

The following statement is made by an official of the 
corporation: 

"It is impossible to ascertain how many employees in 
addition to those yet receiving the special benefits that 
continue for 5 years hold stock upon which these special 
benefits have ceased to be paid but it is conservatively esti- 
mated that it would increase the number to about 50,000." 

The reports issued by this corporation in 1915, applying 
to the year 1913, show the following condition: 

Average number of employees 228,906 

Number of employees holding stock in 
company and receiving a bonus of 
$5 per share 35,026 

Number of shares of capital stock 

outstanding 8,685,836 

Number of shares of stock held by em- 
ployees 146,462 

Salaries and wages paid to employees. $207,206,176 

Amount expended by company ac- 
count of stock subscription plan, 
approximately $1,000,000 

Proportion of employees holding stock 

and receiving a bonus thereon 15% 

Proportion of outstanding stock held 
by employees upon which a bonus 
is paid 17/10% 

Cost to the company of stock sub- 
scription plan compared with sal- 
ary and wage bill one-half of 1% 

On December 19, 1915, there was announced in the press 
a special distribution of bonuses of nearly $2,000,000 to 
officers, heads of departments, superintendents and minor 
executives. This is based on the enormous profits for the 
calendar year, one of the best in the company's history; and 
is in addition to the profit sharing plan for the employees 
above described. 



PROFIT SHARING REPORT 261 

(1919) G. L. Close, manager Bureau of Safety, Sanita- 
tion and Welfare, November 19: 

"This plan was put into force in 1903 and has been con- 
tinued each year since, with the exception of 1915, when it 
was discontinued for that year due to the unsettled business 
conditions. Here are the subscriptions for the years 1916, 
1917, 1918 and 1919: 

No. of employees subscribing: 

1916 1917 1918 1919 
Employees receiving less than 

$800 per year 7,288 3,253 1,920 1,473 

Employees receiving $800 to 

$2,500 per year 16,272 33,443 37,236 46,676 

Emplovees receiving over $2,500 

per year 1,583 2,556 4,621 13,175 

Total 25,143 39,252 43,777 61,324 

No. of shares of stock to September 1 : 

1916 1917 1918 1919 
Employees receiving less than 

$800 per year 8,961 3,253 2,252 2,148 

Employees receiving $800 to 

$2,500 per year 31,952 52,680 72,865 101,764 

Employees receiving over $2,500 

per year 9,356 11,819 21,537 54,149 

Total 50,269 67,752 96,645 158,061 



Charles Warner CoxMPAny. 
manufacturers and distributors, cement, lime, etc. 

wilmington, del. 1912. 

(1916) Surplus profits are distributed by this company 
in the form of its common stock, which it purchases for the 
purpose in the open market. One-third of the net surplus 
earnings, after payment of 7% dividends on preferred shares 
and 6% on common stock, is set aside for distribution among 
the employees. 

The stock assigned to the participating employees is held 
for them for a period of five years, meanwhile all dividends 
being paid to them in cash. In the event of death, resignation 



262 THE NATIONAL CIVIC FEDERATION 

or lay-off, stock is promptly issued to the employee or his 
heirs. 

The executive committee of the company reserves the 
right to withhold the stock from any employee for cause* 
such stock then reverting to the profit sharing fund. Only 
employees who show special effort in the company's service 
are entitled to participate in the surplus profits. The distri- 
bution is not in proportion to wages, but all employees are 
divided into four classes, A, B, C and D, according to effi- 
ciency; the A group receiving the maximum share and the 
D group the minimum. All employees are eligible except 
officials of the company and wagon drivers, yard helpers, etc.. 

There is also a stock subscription plan, under which 
every January the company offers to its employees its first 
and second preferred stock at a price slightly lower than 
the market value. Each employee may subscribe to an 
amount not exceeding 30% of his salary. The lower salaried 
employees receive preference if the allotment of stock is over- 
subscribed. The company purchases this stock in the open 
market, for resale to subscribing employees. 

Payments are permitted in instalments of $2.50 per 
share, to be deducted monthly from the salary check. In- 
terest is charged upon the unpaid balances at the rate of 5% r 
this being deducted from the regular dividends of 7%. 

The company reports it does not regard the plan as an 
unqualified success, for it has been unable to increase its 
earning capacity. During years when no distribution was 
made a very unsatisfactory feeling was caused among the 
employees. The management believes thoroughly in the 
principle of profit sharing, but states that "it is hard to make 
the average employee be satisfied with the working out of 
these principles, if there happen to be two or three poor 
years and the profits do not develop above the dead line." 

(1919) Charles Warner, president, October 13: 

"Our plan covers approximately the following: We set 
aside at the end of each year a cash sum amounting to one- 
third of the company's earnings in excess of 6% on its com- 
mon stock. This fund is applied to the purchase of common 
stock in the market. This stock so purchased is distributed 
each year among the higher group of employees; that is, 
managers, superintendents, foremen, clerks, and so forth. 



PROFIT SHARING REPORT 263 

We do not make any distribution to the laboring classes. 
These receive only their day wage or their piece-work basis 
as the case may be. 

"The plan is still in force and so far as we know our 
employees are pleased with and appreciate the company 
policy. Our total number of employees at this time is be- 
tween four and five hundred, and somewhat over one hundred 
participate in the stock distribution. There has been no 
change or modification in the plan since 1916. So far as 
we can tell the plan is favorably regarded by those who re- 
ceive it, since we feel that we have a very loyal and active 
working force among the group mentioned. We never have 
any collective labor troubles with the group that receives this 
stock. There are of course occasional individual cases which 
have to be handled on their own basis. 

'We have not introduced anything new since 1916 except 
that in the working class group we are constantly striving to 
get away from the day wage and to get every department of 
work on a piece-work basis that is possible. We do not feel 
that the size of our company, the nature of its business, nor 
the extent to which we conduct our present plan, is any special 
test of the ability of allaying unrest." 

Youngstown Sheet and Tube Company, 
youngstown, ohio. 1913. 

(1916) Stock is offered to heads of departments and 
their chief assistants at a price considerably below the market 
value, varying according to the length of service of the sub- 
scriber. About 125 are eligible. Interest is charged the 
employee at 5% on the unpaid balance and all dividends in 
excess of this interest charge are credited to the stock, to- 
gether with such cash payments as the employee may elect 
to make. No certificate is issued in less than two years from 
the date of subscription. 

The company also pays a bonus to all employees, when- 
ever earnings justify it. This bonus is based on the wages of 
each employee during the year. Officers of the company do 
not participate. The bonus has ranged from 3% to 6% on 
yearly wages. It was announced in January, 1916, that the 



264 THE NATIONAL CIVIC FEDERATION 

annual distribution in March would be at the rate of 5%, 
the total amount being about $350,000. 

The company reports that the stock plan is a success, but 
that the bonus distribution has developed several bad features, 
including tendency on the part of the employees to spend their 
bonus money carelessly or to plan expenses in anticipation of 
the extra payments. 

(1919) J. A. Campbell, president, September 23: 

'We have no profit sharing plan in effect and have not 
had since 1916. We were of the opinion at that time that this 
had more or less to do with the unrest in this community and 
possibly was responsible for the strike at that time. As 
you may know, this strike originated at the plant of the Re- 
public Iron and Steel Company, which is adjacent to our 
plant, their men claiming that our profit sharing plan resulted 
in our employees receiving higher wages than they did for 
the same kind of work, and they struck for an increase in 
wages and induced our employees to strike also. 

"For that reason we abandoned the profit sharing plan, 
which we had in effect for six years, and now we pay a bonus 
only to our heads of departments and other important em- 
ployees who have charge of any considerable number of men. 
This bonus is paid at the end of the year and is based largely 
upon the earnings of the company, and has run in the past 
from 12 1 2% to as high as 100%, being graduated according 
to the responsibility of the men. This bonus is not fixed at 
any particular percentage of the salary of the employees, 
and no bonus is paid unless the company makes more than 
reasonable percentage for our stockholders. We have had 
in mind working out some fixed plan but as yet have not 
done so. 

"In addition to this, we expect sooner or later to sell to 
our employees stock of the company under a long time pay- 
ment plan. Our stock, however, has been selling at §325 
to $350 per share, and the dividend paid does not warrant 
this price, and until such a time as we can issue a stock divi- 
dend and force this stock down to somewhere near par it 
would be unwise for us to try and arrange for the sale of 
this stock, for the reason that our employees would not be 
justi^ed in purchasing it. 



PROFIT SHARING REPORT 265 

"We are very strongly of the belief that this is the best 
method of preventing industrial unrest and is best for our 
employees, as they are obliged to save a certain percentage 
of their earnings. We are very strong believers in the plan 
of the United States Steel Corporation in this respect and 
hope to put some plan in operation as soon as the Supreme 
Court decides (if it does decide) that stock dividends are 
not income." 



266 THE NATIONAL CIVIC FEDERATION 



EXCEPTIONAL PLANS. 

This chapter heading does not ignore the fact that many 
of the plans described in other chapters show features apart 
from their strict classification. The '"exceptional" herewith 
given might rather be described by the phrase "diverse" 
plans. They are quite too many to be called exceptions. 
They hardly run together and certainly do not belong to any 
other chapter. They present variety. They indicate that by 
many methods employers are feeling the way to settling their 
plans, each seeking arrangements best applicable to condi- 
tions in his establishment. The endeavors of some of the 
smaller companies as here recorded are significant of the 
adaptability of the live business man to the exigencies of his 
special case. 

The ideas and purposes of the conductors of some of the 
widely discussed ambitious experiments are set forth in con- 
densed but authoritative form. It is to be noted that most 
of the companies concerned distribute pamphlets, some of 
which are voluminous and set forth in full both methods and 
the reasons for adopting such methods. 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. 
A date in a sub-heading indicates the year in which the 
experiment under notice began.] 

Ashland Fire Brick Company, 
ashland, ky. 

(1919) E. M. Weinfurtner, treasurer, November 18: 
"All of our employees who have been in continuous serv- 
ice with the company beginning at the first payroll in Jan- 
uary and ending the last payroll in December are qualified 
to participate. We allow two months for absence which may 
be due to accidents or sickness. After 6% of the invested 
capital has been set aside for the stockholders the remainder 



PROFIT SHARING REPORT 267 

is divided on the basis of 85% to the stockholders and 15% 
to the employees, the latter percentage being paid out in cash 
annually. The total amount of wage of those participating 
is divided into the total amount set aside to secure the per- 
centage, which each will receive based upon the annual wage 
or salary which he received. The 15% already referred to 
is divided into two classes A and B, A receiving 5% and B 
10%. A consists of the officials, clerical force and superin- 
tendents, while class B takes in all those which are not in- 
cluded in Class A. 

"Below is some data covering the plan for the three com- 
plete years in which it has been in operation: 

1916 1917 1918 

Number of men employed January 1 265 256 307 

Number participating 184 216 188 

Percentage of men continuously employed 

throughout the year 70% 84%% 61% 

Rate for Class A 31.2 41.9 16^ 

Rate for Class B 14.7 9.97 ^ 7.05 

The largest amount received in class B. . $161.75 137.53 132.26 

The smallest amount received in class B. 42.50 41.87 26.35 

Average 89.98 80.49 68.75 

'The smaller number of men participating in the 1918 
distribution as compared with the number employed at the 
first of the year was due to the large number of our men who 
went to the service. The feeling toward the plan is we believe 
very good, and we have reason to believe that our employees 
appreciate it and it has done much to keep them with us. 

'While the idea of making the distribution annually may 
be criticized still it has its advantage from this point, that 
after the seventh to the eighth month those who up to that 
time are qualified to participate are reluctant to make any 
change if they feel so disposed until after the first of the 
year. Our employees are to a considerable extent interested 
in the welfare of our company and have given their individual 
efforts to make it successful. 

"During the three years the plan has been in effect we 
have had no labor troubles, although we would hesitate to 
say that the profit sharing plan was responsible for this, 
since in our dealings with our employees we have been able 
to rub elbows with them and to meet them personally in and 



268 THE NATIONAL CIVIC FEDERATION 

about the works, and the feeling has always been very cordial 
between the management and the employees. 

"In addition to the profit sharing plan we have group 
insurance, in which each employee is given a life insurance 
policy for $500 after three months of service, which is in- 
creased annually $100 until a maximum of $1,000 is 
reached." 

; The A. W. Burritt Company. 

LUMBER AND TIMBER. BRIDGEPORT, CONN. 1902. 

(1916) The plan of the A. W. Burritt Company of 
Bridgeport, Conn., is unique among profit sharing plans. It 
is, in substance and effect if not legally, a co-partnership 
between capital and labor. It is the only one of the plans 
investigated under which the employee "takes a chance" in 
the sense of sustaining an actual and tangible financial loss 
if the business itself suffers a loss. 

The company is engaged in the lumber business and has 
250 employees, of whom about 100 are affected by the plan. 
The plan is limited practically to the skilled workmen, of 
whom not more than three-quarters are allowed to participate 
for the reason that the business is subject to fluctuations and 
the company does not wish the contract to apply to a larger 
force than it can be reasonably sure of providing with steady 
work. Employees desiring to participate execute a profit 
and loss sharing contract with the company by which they 
agree to share the profits and losses of the business. 

Under the arrangement the company retains each week 
one-tenth of the employees' wages to be held by it as a reserve 
fund, from which to make good their share in the losses, if 
any. In case of no loss, this reserve money is refunded to the 
employees on or before the end of each year. 

The profits and losses are ascertained as follows: An 
inventory is taken on February 1 of each year. From the 
gross results thus obtained shall be taken all expenses of 
every kind, including depreciation of buildings, tools and 
machinery, and bad debts; and the results of the above shall 
be considered the net gain or loss, as the case may be. If 
the result thus shown shall be gain, the capital actually in- 
vested as shown by the inventory at the close of each year 



PROFIT SHARING REPORT 269 

shall first draw 6% interest (or in case there is less than that 
amount shall draw what net gain there is, in liquidation of 
its claim); the balance then remaining shall be divided be- 
tween the company and the participating employees in such 
proportions as their total wages for the current year bear to 
the actual capital invested. 

In case there should be a net loss made on the business 
of the year, without figuring any dividend for capital, the 
loss is divided between the company and participating em- 
ployees in the same manner as described for dividing profit; 
but the employee in no case becomes responsible for losses 
greater than the amount reserved from his wages, 

Other significant sections of the contract are the following: 

"The party of the first part can at- any time discharge 
any party of the second part from its employ and require 
him to withdraw from this contract, but in such case said 
party of the second part shall have the option to with- 
draw his full reserve or to leave it until the end of the 
year to share in results as above described. 

"It is further agreed by the party of the first part that 
no party of the second part shall be temporarily retired 
from work so long as the party of the first part has any 
work of the kind said party of the second part is accus- 
tomed to do; but if there should be a shortage of work in 
the hands of the party of the first part it shall reduce the 
hours of work and so divide the work between the parties 
of the second part. If at any time any party of the second 
part should become sick or incapacitated to perform his 
duties, and has the certificate of a reputable physician that 
he is so incapacitated, after two weeks duration of said 
sickness, said party can draw on his reserve wages at a 
rate not greater than $6 per week, without affecting his in- 
terests in the profits at the end of the year. Further, if any 
party of the second part should become injured on account 
of any accident while in the employ of the party of the first 
part, said party of the first part shall, at its own expense, 
provide him with a competent physician or surgeon, after 
application is made to it stating that such services are 
needed. 

"If any of the parties of the second part wish to inquire 
into the accuracy of the annual report made to them by the 
party of the first part, the books of the party of the first 
part shall be opened for inspection by any reputable public 
accountant employed by the party of the second part, pro- 
vided such accountant will agree to confine his report to 



270 THE NATIONAL CIVIC FEDERATION 

the statement that the company's report was or was not 
correct, and if not correct shall fully define its error. 

"It is agreed that all differences and disputes resulting 
from the operation of this contract shall be settled by arbi- 
tration." 

The company states that the employees affected have 
averaged a profit of about 6% on their annual incomes. 
There has never been a loss since the inception of the plan. 
The nearest approach to a loss was in the year 1908. At 
the beginning of that year a meeting of the profit sharing 
employees was called by the company and they were plainly 
told that the company was looking forward to a year in which 
there would probably be a loss, and that if there were any 
faint-hearted among them they might retire without creating 
offense. The employees stated that they had shared the 
profits and did not expect to run in case of adversity. Not 
a single employee withdrew, and an official of the company 
states: "We have very little fear that a single year's loss 
would affect them very seriously. Of course, if it should 
continue for more than a year, it would be very likely to 
cause many or most of the men to withdraw. But we think 
they would stand one year without serious effects." 

The same official says further: "I feel safe in saying 
that the local unions in our town and in our trade believe 
that our profit sharing plan is a good thing for our employees,, 
and it has been the means of maintaining a friendly relation- 
ship with organized labor, even at times when we were strenu- 
ously opposing their methods and their demands." 

With reference to the motive of the company in making 
the experiment, this official states: "Our object in going into 
this thing was to get the hearty co-operation of the workmen, 
with the feeling on our part that the price we were paying 
for such co-operation was the percentage of profit which this 
contract produced. It was more a business proposition with 
us than a philanthropic one." 

(1919) A. W. Burritt, treasurer, September 4: 

"Our plan is still in force with satisfactory results. There 
have been no changes or modifications. The employees seem 
to be pleased with it, We have had no labor troubles, and 
so far as we know, no prospects of any. 



PROFIT SHARING REPORT 271 

"We have practiced stock selling to executives and profit 
sharing with workers for a long number of years with profit 
and satisfaction to all parties concerned. 

"Perhaps the most important comment that we can make 
at this time is that in our opinion any plans of this nature, 
in order to be successful, are vitally dependent on the person 
who has their introduction and care in charge. Human per- 
sonal relationship; mutual confidence; close attention to in- 
dividual worth; honest remuneration; a clean, attractive san- 
itary shop, and a square deal without charity are the im- 
portant points. Such things will not run themselves, therefore 
the vital feature is in the hands of the man who manages these 
relations with the employees." 

The company issues a pamphlet describing its plans. 

(The Grand Rapids Refrigerating Co. has provision for sharing 
losses. — Ed.) 

Clark Equipment Company, 
buchanan, mich. 

(1919) Eugene B. Clark, president, November 14: 
"Our profit sharing scheme is in effect a combination of 
profit sharing and partnership through stock purchase. It 
was established January 1, 1916, and has been in effect con- 
tinuously since, subject, however, to a few very slight changes. 
Our average number of employees is about 800 at present, 
though it has run as high as 1,200; 50% of our present force 
are stockholders and participants under this plan. The feel- 
ing toward it by our employees is extremely favorable, inas- 
much as it has always been profitable for its participants. 

"We cannot say just what effect this plan has had on 
modifying the tendency toward labor troubles. We do not 
believe that it could be termed a preventive, but it un- 
doubtedly exercises a strong influence, and as one of several 
plans that we have, that we believe tend to improve the good 
feeling between employer and employee and to give em- 
ployees more interest and happiness in their work, it is sure 
to make our plant, in our opinion, immune to so-called labor 
troubles. It is not limited to heads of departments, and in 
fact is so designed as to operate less to the advantage of heads 
of departments than to the advantage of the rank and file, 



272 THE NATIONAL CIVIC FEDERATION 

though it does not exclude any officer or employee of the 
company. We regard it as an unqualified success and while 
we do not consider it perfect, we have not been able to de- 
termine during the four years we have had it in effect just 
where we could greatly improve it." (Descriptive pamphlet.) 

Columbia Railway, Gas and Electric Company. 

columbia, s. c 

(1919) Edwin W. Robertson, president, November 12: 
6 We are endeavoring to work out a co-operative store 
plan, a home building plan, and a bonus or profit sharing 
plan among our workers. For the past year and a half we 
have had a profit sharing bonus plan among our men, but 
it has not worked altogether satisfactorily. They appear to 
look upon it merely as a fixed raise in wages to be in no wise 
affected by the earning capacity of the company." 

Craddock-Terry Company. 

lynchburg, va. 

(1919) John W. Craddock, November 12: 
4 We have adopted the following features of benefits and 
profit sharing applicable to our Lynchburg factories: 

"a. About July 1, 1918, we took out group insurance, 
graduated in amounts from $500 to $1,500 on each of our 
employees of six months or more service; the minimum 
amount going to the employee who had been with the company 
six months and increasing $100 per year up to ten years, 
making the maximum amount $1,500. Under this plan, 
during the influenza epidemic last year we had some ten or 
more deaths, all of which were paid promptly, and the help 
appeared to appreciate this insurance very highly. 

"b. On July 1, 1919, we put in the profit sharing plan. 
This provides for a distribution of 10% of the net earnings 
of the company (before distribution of dividends to stock- 
holders) to the productive factory employees and a similar 
amount among the executives, departmental, and other non- 
productive employees. The distribution among the produc- 
tive employees is semi-annual, while the other group is an- 
nual. The first distribution was made on August 1, 1919, 



PROFIT SHARING REPORT 273 

covering operations for the first six months of the year to 
July 1. This distribution amounted to about 10% of the 
wages of the eligible employees for the period. The second 
distribution will be made about February 1 or sooner, cover- 
ing the last half of the year, and we estimate will amount to 
probably 16% of the wages of the period covered. This plan 
has met with almost unanimous approval of our help and has 
been rather enthusiastically received. 

'The average number of employees in our Lynchburg 
plants is about 1,200, and those eligible under the profit 
sharing will be from 800 to 1,000. 

"c. A co-operative benefit association was put into effect 
about November 1, 1919. 

"d. Our company has also recently set aside a block 
of its preferred stock, which is 6% cumulative, with a 2% 
extra, making 8% in normal years. This stock has a market 
value of $105 to $110; but our employees are permitted 
to buy it, in amounts not in excess of $1,000, at par, to be 
paid for in instalments in a period of not over one year, and 
to receive all dividends on the stock during the time it is 
being paid for. 

"e. We are, also, interested in a home building com- 
pany, which will sell homes to our employees or other labor- 
ing people at practically cost on easy terms. 

"Although professional labor leaders have been at work 
in our community, and particularly on our help, for the last 
six months, indications at this time are that our help, while 
many of them have joined the union, are well satisfied with 
what we are doing for them and a large majority of them, 
in joining the cooperative benefit association, have signed an 
agreement to submit all claims and grievances to our shop 
committee and accept its decision. We are very much en- 
couraged, so far, with our efforts toward establishing proper 
relations between the employees and the company on an ad- 
vanced basis consistent with the best thought as regards a 
solution of this most important problem." (Circulars.) 



274 the national civic federation 

Dennison Manufacturing Company, 
manufacturers of tags and paper specialties. south 

framingham, mass. 1911. 

(1916) It was recently reported that this company had 
solved the problem of democracy in industry by providing 
that the "wage-earners shall control the business." This was 
assumed to mean that the stock of the company had been 
turned over to the two thousand or more employees. 

Mr. Henry S. Dennison, the treasurer of the company, 
in a letter to Ralph M. Easley, Chairman of the Executive 
Council of The National Civic Federation, under date of 
May 3, 1915, said: 

"I am inclosing a copy of our articles of association 
and by-laws, also a paper bearing on our indutsrial part- 
nership plan. These will correct certain misleading state- 
ments in recent newspaper articles, since but 220 of our em- 
ployees are industrial partners. Further, the plan has been 
in operation since December, 1911, upon the re-incorpo- 
ration of our company, and the results have been very 
gratifying." 

Under the plan first preferred 8% cumulative stock was 
issued to the owners of the business to the amount of four 
and a half million dollars. The company then created a class 
of what is called industrial partners, composed of employees 
who have been with the company live, six or seven years and 
whose yearly remuneration is $1,800, $1,500 and $1,200 
respectively, consisting of officers, managers, superintendents 
and foremen, 

After the payment of dividends on the preferred stock 
and certain other reservations out of earnings are made the 
additional profits are retained in the business, and against 
them are issued to the so-called industrial partners what is 
called industrial partnership stock. This stock is non-trans- 
ferable and non-assignable. When an employee leaves the 
service of the company, dividends on his industrial partner- 
ship stock cease and the company may buy his stock at par 
or exchange it for non-voting second preferred stock, which 
is entitled to a dividend of at least 4% before dividends are 
paid on the industrial partnership stock. Dividends on the 



PROFIT SHARING REPORT 275 

industrial partnership stock cannot exceed 20%, and cannot 
amount to more than one-half the net profits after preferred 
stock dividends are paid. 

After one million dollars of the industrial partnership 
stock has been issued, the entire voting power vests in the 
holders thereof, to the exclusion of the preferred stockholders, 
unless the company shall fail to pay the stated dividends on 
the preferred stock, in which event the voting power reverts 
to the first preferred stockholders. They regain control if 
less than 4% is paid in any one year and if a four-year 
period shows less than the full 8% paid per annum, the voting 
power returns permanently to the first preferred stockholders. 

The plan does not reach the rank and file and is not in- 
tended to do so as it is limited to employees receiving $1,200 
per year and upward, so that the number affected by the plan 
is about 10% of the total number of employees. 

The employees do not exercise any control of the business 
until profits to the extent of one million dollars have been 
earned over and above dividends to first preferred stock- 
holders, and there are certain other reservations. If they 
do acquire the voting power, the retention of it by them is 
conditioned solely by their ability to maintain sufficient profits 
to pay the dividends on the preferred stock. Certain critics 
have termed this an ingenious efficiency mechanism for safe- 
guarding the 8% cumulative dividend to the original stock- 
holders, and have suggested that instead of being a benefit 
to the rank and file, it may be conceived to be a pace-making 
instrument, because the officials and managers would en- 
deavor to keep the power in their own hands, and this could 
only be done by earning the full 8% annual dividend for the 
preferred stockholders, which in turn it is charged would 
mean the speeding up of the men. 

(1919) In December the company issued two booklets 
describing its industrial partnership plan, which retains its 
essential features as in 1916. Following are quotations from 
its statements: 

"It is apparent that this plan does not cover the field 
usually called profit sharing, but confines itself to such prob- 
lems of corporate structure as the abolition of absentee con- 
trol, the most effective method for the distribution of surplus 
earnings, and the gradual knitting into an organized entity of 



276 THE NATIONAL CIVIC FEDERATION 

the older and more responsible employees — in a sense it is a 
combination of the good points of a corporation and a part- 
nership. 

"An analysis so thorough as to deal almost individually 
with cases of more than 2,000 employees led us to the con- 
clusion that profits depended almost solely on such men as 
sales managers, senior salesmen, department heads, foremen 
and the like. 

"Principal employees are now limited to those who have 
had five years or more of service and whose position with the 
company requires the exercise of managing ability and con- 
trol over methods of manufacturing or marketing. 

"Since its establishment the results of the industrial part- 
nership plan have been as follows: 

Shares No. of Prin- 

March Distributed, cipal Employees. 

1913 15.122 167 

1914 18,604 211 

1915 12,779 218 

1916 12.884 228 

1917 43,752 260 

1918 ' 19,015 288 

1919 30,740 320 

Dewey Portland Cement Company, 
bartlesville, oklahoma. 

(1919) The company announced in December that on 
January 1, 1920, it would raise all wages substantially and 
put into effect a plan of progressive sharing in the profits 
of increased production. To meet its financial obligations, 
including the wage increase, the company's production must 
reach 60,000 barrels of clinker per month. On all produc- 
tion over 60,000 barrels the employees would be paid 10 
cents per barrel; over 70,000 20 cents, and over 80,000 
30 cents, all to share equally. Each month the share of 
each man would be deposited in a bank at the regular rate 
of interest, and on December 31, 1920, each will get a check 
for the total of his profits for the twelve months plus interest 
provided he has remained in the employ of the company. 
The company also provides life insurance for employees in 
its service for one year. 



profit sharing report 277 

Eugene Dietzgen Co. 
manufacturers drawing materials, etc. 

NEW YORK. 

(1919) R. Fred Allen, vice-president and general man- 
ager, November 24: 

"This company has had in operation since the year 1890 
a plan to compensate managers. The plan provides for the 
automatic retirement from the business of the managers of 
all branches after they have accumulated, through having 
received a certain percentage of the profits of their branch, 
stock the dividends on which it is assumed will be sufficient 
to give them a comfortable living. This condition formerly 
was attained prior to a man's reaching the age of forty, i. e., 
providing he started with the company in his early twenties. 
For three years past, a certain percentage of the net profits 
has been set aside and has been distributed in cash to old 
and deserving employees, in the ratio that their salary and 
length of service is to the total salaries paid to those who 
participate. Our business is divided into two classes, factory 
and selling organization. The factory has its own staff of 
managers and each selling branch has its own staff of man- 
agers. There are about 275 employees at the factory but 
as these come and go so rapidly, we have never made an 
attempt to place in operation a profit sharing plan for the 
rank and file but for the past two years have set aside a 
certain percentage of the profits for the foremen, about fifteen 
in number. I estimate that about 20% of the total number 
of the employees at the various selling branches participate 
in the profits set aside by the respective branches for their 
old and deserving employees as mentioned above. 

"Since inaugurating the profit sharing plan with the fore- 
men at our factory, we believe that our labor troubles have 
been less. The success of the plan as regards managers is 
unquestioned but we have not yet reached a conclusion in 
regard to the profit share which is being paid to employees 
at the various branches in cash. In inaugurating this plan, 
it was our idea that, since our scale of wages appeared to 
be as high as what others paid, the profit share paid out at 
the end of the year would be treated by employees in the 



278 THE NATIONAL CIVIC FEDERATION 

nature of extra compensation but due to the steady increase 
in wages of all classes, we fear that the annual payments 
for profit share are being looked upon as simply a part of 
their salary and we believe that this condition will possibly 
continue as long as the buying power of the dollar continues 
to grow less." 

C. B. Dolge & Company. 

MANUFACTURING CHEMISTS. 
WESTPORT, CONN. 

(1919) R. A. Dolge, November 14: 

4 We have two forms of profit sharing, one for our em- 
ployees in the office and factory, another for certain of our 
department heads. We are a small firm, only employing 
about one hundred people, all of whom participate in one or 
the other forms of profit sharing. The department head 
bonus plan has been in force in this company for just one 
year. In our other company, the embalmers' supply com- 
pany, it has been in force among department heads for about 
eight years. The employees' profit sharing plan has been in 
force in this company and in the embalmers' supply company 
for two years. 

'The feeling toward the plan by those for whose benefit 
it was intended in our department head plan has proven a 
big success. Our employees' profit sharing plan has not 
proven so successful. 

"Our employees' profit sharing plan in this company and 
the embalmers' supply company is to give bonus to em- 
ployees who have been with us for one year, 5%, for five 
years or longer 10%, of their wages, provided we have had 
a successful year and provided their records have been clear. 

"We have no labor troubles as we are careful in selecting 
our help and try to work with them and have a much better 
class of office and factory help than the average firms in this 
section. But we cannot say this bonus plan on the whole 
works out as satisfactorily as it should, although the em- 
ployees are greatly pleased and appreciate receiving at 
Christmas time the 5% or 10% bonus, yet it seems to us that 
in a comparatively short time this is forgotten and during 



PROFIT SHARING REPORT 279 

the year it does not help to increase the efficiency, etc., and 
that the good results we obtain and the co-operation we 
obtain from the employees even when consulting them on 
this plan is due to their ambition to advance and to their 
desire to be conscientious in their work. It may be due to 
the fact that we have been lax in not bringing before em- 
ployees once a month in their pay envelopes the benefits and 
object of this profit sharing Christmas plan. 

"The department head plan has proven far more effective, 
for our department heads' salaries are not as large as the 
salaries paid by other firms for similar work, but as the 
percentage of profit sharing is much larger when we have 
successful years the salary received with the profit sharing, 
brings their salaries much higher than paid by other firms. 

'We have a fixed profit which we must earn. A certain 
percentage of all earned over that fixed profit is divided 
among certain department heads according to the standing 
of their department toward the success of the business and 
according to showing made by their department, so that in 
certain cases, although a department might have a certain 
amount to its credit on the profit sharing due to the fact that 
their record was only 75% effective, they would only receive 
75% of the amount set aside. This we find has resulted in 
stimulating each department head to be 100% perfect for 
his department. 

'We have found that our policy of closing each Saturday 
at 12:00, office and factory throughout the year, even before 
this policy was adopted by fadtories, the fact that we keep 
our office and factory force working all year round even at 
times when business is dull and it means a monetary loss to 
us, has helped to secure the loyalty and good will of our 
employees. 

"Another plan which we have found very effective is 
to have all employees feel that if they have any suggestions 
to offer or grievances to bring them before the management, 
and they will receive careful consideration." 



280 THE NATIONAL CIVIC FEDERATION 

Laboratory of Thomas A. Edison. 

ORANGE, N. J. 

(1919) Charles Edison, December 11: 
"While we have introduced, or are about to introduce, 
profit sharing plans in four divisions of the Edison industries, 
we are as yet in position to furnish information with respect 
to only one, the Edison Storage Battery Company. 

"It is not our intention to work out a general plan that 
will apply to all divisions, but rather to have a division work 
out and inaugurate a plan that it is believed will be most 
suitable for that particular division; then have the other 
divisions come along with their own individual plans and 
inaugurate them. It may be that one plan will be very 
satisfactory for one division but not so satisfactory for an- 
other division, or after a trial of the various plans it may 
be found that a certain feature can be used to advantage in 
the plans of all the divisions while some other feature can 
be applied to only one division. For instance, the plan in- 
troduced in a large manufacturing division will probably be 
different from that introduced in a selling division where a 
comparatively small number of people work under different 
conditions. I do not believe that any general plan can be 
used to advantage by all concerns or by all divisions of one 
concern. 

'The Edison Storage Battery Company's thrift dividend 
plan was inaugurated October 1 of this year. This plan 
affects all the employees of that division, both manufacturing 
and selling, about 1,600 men and women. It is working with 
apparent satisfaction to all concerned so far. We believe it 
has done much toward creating a better feeling among the 
workers and between the workers and the management, and 
it may well be that it has saved that division from possible 
labor troubles." 

A prize money plan was announced to be introduced 
early in 1920 in the Edison musical phonograph division. 

Referring to its thrift dividend plan of the Edison Storage 
Batter\" Company workers, the company published the fol- 
lowing: 

"More generally than ever it is becoming recognized 
that industry canno^ depend on any one of its elements 



PROFIT SHARING REPORT 281 

alone, and with this recognition is coming a better under- 
standing, tolerance, and respect among the industrial forces 
that were so successful in obtaining pre-eminence in the 
world of war and that are now working side by side to 
retain and hold this same pre-eminence in the world of 
commerce. In olher words, it was discovered that when 
the American employer and employee get together they 
can beat anything on earth. 

"But of course such understanding, tolerance and re- 
spect must be founded on sound principles. Various social 
groups have devoted considerable time and effort towards 
establishing a set of principles which would be just, and 
while differences in opinion as to method and application 
are many, there still remain certain fundamentals to which 
all are agreed and can without fear of any justified contro- 
versy be accepted. These fundamentals are common to 
many of the representatives of employers, employees, gov- 
ernmental bodies and other interested social groups and 
may be briefly analyzed into the following: 

Principles Affecting Employees. 

1. The adoption of the eight hour day. 

2. A reasonable control of industrial conditions. 

3. A fair wage to all workers. 

4. Participation in profits. 

5. The consideration that rights imply duties. 

Principles Affecting Employers. 

1. A fair return on the money invested in a business 
commensurate with the skill, enterprise and risk in- 
volved. 

2. Control of the direction and management of the in- 
dustrial organization. 

3. The consideration that wealth is a trust and that 
managers are trustees. 

Principles Affecting Employees and Employers. 

1. The consideration that the interests of both employee 
and employer are irrevocably bound together and 
deserve the fullest measure of mutual understanding, 
tolerance and respect. 

2. The consideration that both employee and employer 
owe a duty to the state through the creation of use- 
ful wealth and that labor is the law of life. 

3. That each appreciates the importance of exercising 
a true spirit of helpfulness and constructiveness, 
and be determined to act for the best interests of all. 

4. A faithful and religious application of the "golden 
rule." 

'While the perfect execution and application of these 
principles must come through time and the processes 



282 THE NATIONAL CIVIC FEDERATION 

of evolution, it is worthy of note that admirable prog- 
ress has been made by the Edison Storage Battery Company 
toward fulfilling the principles affecting employees. The 
progress must, however, still be regarded as being in an 
experimental stage and the final result will depend very 
largely upon a proper response on the part of the em- 
ployees." 

Elk Fire Brick Company, 
st. marys, pa. 

(1919) J. D. Ramsay, president, November 18: 
'The only plan we have put forth along this line to date- 
is one which seems to us to be entirely new. We have a 7% 
cumulative preferred stock which we sell to the public. We 
are, of course, not a large concern and naturally our stock 
is not listed. The common stock of the company, however, 
represents the real cash originally put into the business and 
is not like most common stocks issued by concerns. 

"The preferred stock has been sold for the purpose of 
developing the business from time to time. This preferred 
stock yields 7% to any buyer regardless of whether he is 
connected with the company or not. We have, however, put 
a supplement out in connection with that stock when pur- 
chased and owned by employees of the company. When I 
say employees, I would say that this refers to those working 
in the plants, in the mines, and in the official force such as 
the office help and salesmen. All are included under the 
same plan. This plan provides that if these employees own 
this stock in their own names for a period of one year they 
are to receive a bonus of 2% on same, so long as they remain 
in the employ of the company. If they own this stock in 
their own name for a portion of a year, then a portion of this 
2% bonus is allowed to them. It is distinctly understood, 
however, that no one can own and obtain benefits on a greater 
amount than $3,000 total of this stock. It is further under- 
stood that this bonus ceases the moment the employee leaves 
the company. We have had this in operation for about twoj 
years and it works very fine." 



profit sharing report. 283 

The Ford Motor Company, 
detroit, mich. 

(1916) In January, 1914, the Ford Motor Company of 
Detroit adopted a scheme which was such a radical deviation 
from the ordinary profit sharing plans then in existence that 
this report would be incomplete without a more or less de- 
tailed description of it. On account of the novel character 
of the plan and the large, number of men affected, it was the 
subject of much comment throughout the country. 

Whether the underlying motive of Henry Ford and his 
associates was wholly humanitarian or whether the plan was 
conceived with the idea that it would be good advertising, 
or whether both of these considerations entered into its adop- 
tion, the fact is that it has been beneficial for the employees 
and good business for the company. 

Mr. Ford claims that he proceeded upon the theory that 
"all problems are solved by the elimination of worry through 
the payment of adequate wages/' and he accordingly inaug- 
urated a plan whereby all of the employees that met the 
requirements of the plan would receive, in addition to their 
wages, a share of the profits so that the minimum wage would 
be $5 per day. 

It was determined to base wages upon certain hourly rates, 
ranging from 34 to 80 cents. 

With an eight-hour day schedule, the plan, so far as it 
affects the shop employees, works out as follows: 

Profit sharing Total 

Rate per hour. rate per hour. income per day. 

$.80 $.071/2 $7.00 

.73 .11% 6.75 

.68 .131/4 6.50 

.61 .17% 6.25 

.54 .21 6.00 

.48 .23% 5.75 

.43 .253,4 5.50 

•38 .27% 5.25 

.34 .28i/ 2 5.00 

An employee must be in the continuous service of the 
company for at least six months to be eligible to participate 
in the profit sharing scheme, and the additional qualifications 
are: 



284 THE NATIONAL CIVIC FEDERATION 

1. Married men living with and taking good care of 
their families. 

2. All single men twenLy-two years of age and over of 
proven thrifty habits. 

3. All single men under twenty-two years of age who 
are the sole support of some next of kin or blood relation. 
Girls are eligible as profit sharers only when the sole sup- 
port of some next of kin or blood relation. 

Employees are not allowed time off, with pay, for any 
cause whatever, and are docked in half -hours for all time 
lost. 

An employee of proven thrifty habits is defined by the 
company as one that does not indulge in the excessive use 
of liquor, nor gamble, nor engage in any malicious practice 
derogatory to good, physical manhood or moral character 
and who conserves his resources and makes the most of the 
opportunities that are afforded him in his work. 

An employee supporting a home for near relatives is 
defined as one who is the sole support of his next of kin, 
dependent upon him and resident in the United States. 

The possibility that the men might be unable to adapt 
themselves to a condition of sudden affluence was met by re- 
quiring certain standards of living in order to become par- 
ticipants in this profit sharing plan. 

A staff of investigators, picked for their fitness as judges 
of human nature, visit the families of the shop employees 
to learn their home conditions. At the inception of the plan, 
the staff consisted of 200 men, which has since been reduced 
to 40. In their investigations to ascertain what employees 
were eligible to participate in the profit sharing plan, they 
consulted every possible source of information — churches, 
fraternal organizations, government records, family bibles, 
passports — in fact, everything that they thought would give 
the truth about a man was scrutinized. 

It was made quite evident that this system, under which 
the men were obliged to qualify before given the increased 
wage, had resulted in causing many of the employees to 
transform their homes from old shacks into respectable, if 
not even more than ordinarily comfortable, houses. One 
illustration suffices to indicate the general condition. An old 
small tar-paper shack, in which there were a kitchen (one 



PROFIT SHARING REPORT 285 

side being curtained off for a couch) one bed-room and a 
sitting-room, was still being occupied by a mother and son. 
In the center of the kitchen was a receptacle containing black 
water in which she had washed the linen from week to week 
rather than carry fresh water from a neighborhood hydrant. 
The yard was littered with tin cans. But the son had saved 
money enough to make a payment upon a lot and the company 
had given him credit for lumber. He had almost finished 
a two-story frame cottage of a substantial character and 
pleasing appearance, containing bath and furnace. As soon 
as he had shown that he had a savings account and discon- 
tinued spending his evenings in evil resorts the company in- 
creased his wages. He was just about to abandon the old 
shack with its disordered surroundings for the new convenient 
place, where his mother would not have to carry water a 
block for her washing. This influence on the moral character 
and home life of such men and their families can only be 
regarded as an improvement. 

Notwithstanding the scrutiny to which the men were sub- 
jected, in the first ten months that the plan was in operation, 
a total of approximately $8,000 was obtained by employees 
falsely representing their conditions so as to fraudulently 
participate in the plan. Various deceits were resorted to in 
such cases; some hired women to pose as their wives at from 
$2.50 to $25 a day, some borrowed children and others 
borrowed passports and bank books. The company early 
established its right in the court to recover the money thus 
obtained by false pretenses and about $8,000 was paid back 
to the company. When the various frauds were discovered, 
the men perpetrating them were not discharged but the 
company insisted that they return the money and start in 
all over again. The company is proud of its record in that 
respect, claiming that it is a vindication of the painstaking 
way in which the company is trying to dispense the money 
and see that it is used for the purposes for which it was 
originally designed. 

On the whole, the plan has been beneficial to the em- 
ployees and community alike. The company states that 
there is a marked increase in the number of naturalized 
citizens; a marked improvement in the tendencies of the men 
toward thrift and economy; in their habits, health and 



286 THE NATIONAL' CIVIC FEDERATION 

physical attributes, and that there is a tremendous drift 
toward better living conditions, more sanitary homes and a 
cleaner and better neighborhood. In the first ten months of 
the plan the gain per man in bank deposits was 130%%; in 
life insurance, 86%, and in homes owned, 87%%. As the 
men have committed themselves to a very large extent to the 
purchase of homes, relying upon a continuance of the pay- 
ment of the profit sharing addition to their wages, they would 
be confronted with a very serious situation if the company 
did not continue to pay these profit sharing additions. 

When the Ford plan was announced it was predicted that 
industry would be disturbed in the city of Detroit and very 
likely elsewhere, as no other firm was financially able to 
introduce any such extravagant system. It is now contended 
by some, but the idea is ridiculed by others, that as soon as 
a real competitor enters the field covered by the Ford com- 
pany it will have to discontinue the high wage rate now 
being paid. Some argue that others are now coming along 
and will have to be reckoned with in the near future, but 
the friends of the company will not admit any such possibility. 

It is plain that the labor market was not disturbed, as 
was predicted. This is partly due to the fact that when the 
system was introduced unemployment was so great that men 
were willing to take jobs wherever they could get them and 
at current wages. 

An interesting phase of the situation lies in the fact that 
even at the highest rate paid, namely $7 a day, the employees 
of the Ford company do not get as much as skilled mechanics 
in the same industry in Detroit where different processes are 
employed in making the automobiles of a higher grade. 
This company, specializing to such a large degree and de- 
pending almost entirely upon machinery, with unskilled labor 
to guide the product and handle the machines, requires al- 
most no skilled workmanshin. 

j. 

There has also been put into operation a profit sharing 
plan for employees other than the shop employees, who are 
qualified as follows: 

Class 1. Men receiving $200 a month or more. 
Class 2. Men over twenty-two years of age receiving 
less than $175 per month. 



PROFIT SHARING REPORT 287 

Class 3. Men under twenty-two years of age and 

women. 
Class 4. Salesmen. 

Class 1, the men who are receiving $200 per month or 
more, are the heads of departments, and they are paid (be- 
sides salary) usually, by the custom of the company, at the 
end of the year, a so-called bonus for brains, which is awarded 
on the basis of merit and individuality manifested and put 
into force for the good of the company during the year. 

Class 2, the men twenty-two years of age and receiving 
from $75 to $175 per month, now receive from $5 to $7 
per day. 

Class 3, the men under twenty-two years of age, and 
women, receiving from $30 to $50 per month, now receive 
from $2 to $4 per day. 

Class 4, the salesmen, receive a minimum of $5 per day. 

Mr. Ford was not willing to admit that others could not 
adopt his plan. When it was inaugurated, in January, 1914, 
the company made an appropriation of ten million dollars 
to cover the increase in wages. After one year's operation, 
the business had developed to such an extent that the addi- 
tional profits were vastly in excess of the increase in wages. 
The company claims that this was attributable directly to the 
greater efficiency of the men and such a continuity of service 
as practically to eliminate any turnover in labor. 

The minimum annual labor turnover of most corporations 
is estimated at 33%, whereas this company claims that it 
has not had a changing force and that its employment depart- 
ment has been active only when the company was required 
to increase its force, as was the case in April, 1915, when it 
took on 2,000 new men. To this point others replied that in 
time of depression the company could not judge as to the 
possibilities of a turnover, since men would not leave during 
such a period when they knew that they could not get work 
elsewhere. 

There has been no noticeable speeding up in the work 
of the employees. An official of another automobile com- 
pany in Detroit, who spent more than a week in a critical 
study of the plan, had much to say about the speeding up 
of the workmen in certain parts of the works, but an investiga- 



288 THE NATIONAL CIVIC FEDERATION 

tion by a representative of the Civic Federation disclosed that 
this contention was not correct. 

While the Ford plan may be an ideal one for that plant, 
it is not applicable generally throughout the manufacturing 
industry and it is extremely doubtful if there are many con- 
cerns that could successfully adopt it. The Ford company 
manufactures and sells a finished product ready for delivery 
to the consumer, the market for which it is able to create. 
The company has practically no rivals in its own field and 
need not cut prices unless it sees fit to do so for the sake 
of larger sales and still larger gross profits. Therefore it 
is able to fix its own wage scales without reference to the 
conditions faced by concerns in close and active competition. 

Catering to the market for low priced cars and specializ- 
ing in one type, it is able to reap the benefit of cost-saving 
methods which the makers of a series of models of higher 
priced cars cannot utilize. Such exceptional conditions per- 
mit a wage outlay which might prove absolutely ruinous to 
a manufacturer who, in competition with others, manufac- 
tures some staple article where the labor item enters largely 
into its cost and for which he could not create any particular 
demand. In such a case, the cost of the article would be 
determined largely by the rate of wages paid by manufac- 
turers generally in that industry and the individual manu- 
facturer w r ould therefore necessarily be limited in the amount 
which he could profitably pay to his workmen. 

But aside from the financial aspect of the plan, it is 
essentially paternalistic and, while it is now accepted by 
the employees, a very large percentage of w T hom come from 
countries where paternalism prevails, it is a question whether 
such close inspection of the private lives, habits and personal 
accounts w T ill be tolerated by the foreigners when they shall 
have become Americanized. To have an inspector insist upon 
seeing a man's savings bank account book, his receipts for 
payments on property, for water tax, for household expenses 
and other items that enter into the family budget, must be 
resented ultimately by those who have come into the spirit of 
our free institutions. 

Although Mr. Ford's antipathy to trade unions is well 
known, their basic objections to profit sharing plans generally 
do not apply with the same force to his plan, as it is in effect 



PROFIT SHARING REPORT 289 

an increase of wages. A trade unionist cannot consistently 
oppose any plan which definitely establishes a high wage 
scale; but the autocratic and paternalistic features of the 
Ford plan are repugnant to the spirit of trade unionism. 

It will be seen that the Ford plan is not in reality a true 
profit sharing enterprise, even though the extra wage pay- 
ments are called by the company a "share in the profits." 
These payments are made outright, as a part of the regular 
daily wage; they are not a stated percentage of the annual 
profits nor in any way made dependent upon the size of the 
profits. The Ford experiment may therefore be put in a class 
by itself as a wholesale increase in wages made possible by 
extraordinary conditions. 

(1919) EL E. Squier, department of education, Sep- 
tember 6: 

"Our plan is still in force in all essential particulars the 
same as in 1916, and the results are very satisfactory. 

"Our force at the present time at the home plant and the 
branches is over 75,000. All who can qualify under our 
rules are eligible for profits. The number not receiving profits 
who have completed their probationary period of thirty days 
is practically none. 

"Several changes in the details of the plan have been 
made since 1916, the principal ones being the reduction of 
the probationary period to thirty days; the increase in the 
minimum rate to $6 a day, and the rating of the force ac- 
cording to the grade of work done. The minimum income 
was changed to $6 per day on January 1, 1919, with a mini- 
mum wage rate of 50 cents per hour and a corresponding 
profit sharing rate of 25 cents per hour. On June 1, 1919, 
a flat profit sharing rate of 15 cents per hour for all wage 
rates became effective and the minimum wage rate was raised 
to 60 cents per hour. 

"The feeling among our employees toward this plan is 
very favorable, as the results have been of great benefit to 
them, as shown by these figures: 



290 THE NATIONAL CIVIC FEDERATION 

January 12 1914 1915 1916 1917 1919 

Average amounts deposited in sav- 
ings accounts and invested in 
homes and lots, per individual... §207.06 $532.34 $617.33 $732.18 $2,171.41 

Average amount in banks, per indi- 
vidual 75.20 213.70 203.62 223.39 750.13 

Average value of homes owned, per 
individual 35.33 65.49 98.68 101.65 647.09 

Average value of lots owned, per in- 
dividual 5.07 6.60 20.97 24.99 128.15 

Average value of homes on contract, 

per individual 247.70 622.04 743.25 998.98 1.394.70 

Average amount paid on homes on 

contract, per individual 83.86 227.14 267.61 342.04 495.58 

Average value of lots on contract, 

per individual 31.23 70.10 95.55 147.63 335.75 

Average amount paid on lots on con- 
tract, per individual 7.60 19.41 26 45 40.11 150.46 

Average amount of life insurance, 

per individual 186.53 455.54 505.66 572.28 857.03 

Monthlv average of rent and board, 

per individual 18.67 18.58 18.65 20.97 26.55 

Number of employees upon whom 

this statement is based 13,251 14,225 29,314 40.903 100% 

"Our industrial relations work has done a great deal to 
prevent labor troubles in this plant. Our plan is not limited 
to the heads of departments, in fact it is distinctly a plan for 
the rank and file. We certainly do consider the results of 
this work as a distinct success, both to our ernplo) 7 ees and 
to the company. Co-operation and exchange of ideas among 
employers is the best way of meeting the labor unrest of the 
present day, 

'We do not pay bonuses in the form of a percentage 
given as a present, but each employee after thirty days service 
receives a share in the profits of the company. The eligibility 
of an employee as a profit sharer is determined not through 
the grade of work that he does, but through his personal 
habits and life. In other words the company reserves the 
right to withhold profit sharing from any individual who is 
using it in a detrimental manner, in order that we may bring 
to his attention the mistake that he is making. 

'We have no retirement or pension fund, as we pay profit 
sharing after thirty days' sendee, and encourage the em- 
ployee to save, advising that profit sharing is to be used by 
the individual for his maintenance when he is no longer able 
to work, teaching him through a corps of advisers the means 
and methods used in investing and saving money properly. 
In case of sickness, where a man is unable to meet expenses, 



PROFIT SHARING REPORT 291 

we have a company fund termed aid to sick, which is to be 
used for the support of the family of a sick employee until 
such time as he is able to return to work. We have a fund 
termed charity fund, for want of a better name, whereby 

we are enabled to pay any deserving expenses, such as those 
incurred in hospitals, doctors 9 services, or other necessary 
payments essential to the welfare of our men. 

"We have rated the entire shop and clerical force accord- 
ing to the grade of work done by the individual and depart- 
ment in which he is employed, giving a minimum and maxi- 
mum to each grade, with the idea in view that when the 
individual has reached the maximum of the grade in which 
he is working, he shall be advanced to a position in the group 
above him when a vacancy occurs and when he has demon- 
strated his value for advancement." 

The company's educational, wage payment and welfare 
plans are described in pamphlets. 

A press dispatch announced on December 31, 1919, the 
following: 

An elaboration of its profit sharing plan, whereby all 
employees will be enabled to purchase certificates of invest- 
ment in the company, guaranteed to return 6 per cent a year, 
and a distribution of bonuses that will total between $8,000,- 
000 and $10,000,000, was announced to-day by the Ford 
Motor Company. 

Approximately 90,000 employees of the Ford Motor Com- 
pany, and other interests of Henry Ford and his son, Edsel., 
will be eligible to participate. The two steps outlined consti- 
tute "only a beginning," and that "other plans for enlarging 
the income and increasing the purchasing power of the dollar 
of our employees are under consideration," according to the 
statement. 

The amount of the bonuses, which will be in addition to 
the distribution of profits under the original profit sharing 
plan, will be based on an employee's daily wage and length 
of service. They will range from $50 in the case of a worker 
in the company's service three months and receiving the mini- 
mum wage of $6 a day, to $270 in the case of the worker 
with five years of service, and receiving a wage of $10,80 a 
day. Salaried employees receiving more than $250 a month 



292 THE NATIONAL CIVIC FEDERATION 

will participate proportionately on the basis of the length and 
value of service. 

The certificates of investment will be issued in denom- 
inations of $100, $500 and $1,000, and are to be non- 
negotiable and non-assignable. They will be restricted to 
employees in the actual and active service of the company. 

While the certificates are not negotiable and not assign- 
able, it is provided they may be left standing in the name of 
a deceased employee, at the discretion of the directors, to 
draw interest and payments for the benefit of his dependents. 

Grand Rapids Refrigerating Company, 
grand rapids, mich. 

(1919) C. H. Leonard, president, November 13, writes 
that the company's plan was installed September 1, 1919, 
the average number of employees being 500, all participating. 
The plan is only one of several methods employed to modify 
the tendency toward labor troubles. Among others is a co- 
operative store, coal at cost to employees, mutual aid society 
and group insurance. The profit sharing plan includes all 
the workers in every department, the foremen, office men, 
shipping force and the yard men. So far it is regarded as 
an unqualified success. Mr. Leonard states: 

'We obtained the percentage which should belong to labor 
from the output of our factory for the past two years and 
the total payroll. In our business it was 26%%. Of course 
in other businesses the percentage would differ. We con- 
sider that as soon as the goods are finished the workman is 
entitled to his full share, whether the goods are sold or not. 
That is a risk we have always taken, and we see no reason 
why we should not take it in the future. 

'There is one idea in this new profit sharing plan which 
has never been included in any other plan that we know about, 
viz., making the employees responsible for any loss arising 
from slowing down of the output. It is taken right out of 
their dividends. Each week a notice is pasted on the clocks, 
where they can all see it. 'Notice: No dividend. Product 
too small.' A notice put on the clocks to-day reads: 'Divi- 
dend notice: we are pleased to announce that you have earned 
a dividend of 16% on your wages for the week ending Mon- 



PROFIT SHARING REPORT 293 

day, November 10, and in addition have paid up all the 
shortage incurred in former weeks; 16% will be added to 
your wages for the coming week.' " 

[The A. W. Burri'.t Company has provision for shar- 
ing losses. — Ed J 

Greenfield Tap and Die Corporation, 
greenfield, mass. 

(1919) Francis G. Echols, vice-president and general 
manager, November 18: 

"In June we installed a plan in our plants which enables 
the employee to share in the savings in the cost of production. 
Our average number of employees is about 1,500. Approxi- 
mately 1,300 to 1,400 are participants in this plan. There 
is considerable sympathy exhibited on the part of our em- 
ployees toward the plan. There is practically no opposition 
to it, and they are gradually working up to the belief that 
it is a sincere and honest effort on the part of our company 
to have them share in the earnings and savings. 

4 We cannot say positively that the plan has been effective 
in the warding off of labor difficulties. There has been noth- 
ing of this kind in our plants since its installation, and what 
effect it would have, should we experience labor difficulties, 
we of course cannot say. This plan is limited to the rank 
and file and does not include at the present time the heads of 
departments. The installation being of such a short duration, 
we would not want to say at this time that it has proven a 
success. We do believe, however, that it is growing more 
and more in favor, and we have confidence that it will eventu- 
ally prove a success." 



P. Hilton. 

CERTIFIED PUBLIC ACCOUNTANT. 

NORFOLK, VA. 

(1920) Mr. Hilton writes, January 19: 

,4 The men connected with this office who are accountants 
and members of the field force are eligible after one year's 
continuous service to an arrangement whereby they share in 



294 THE NATIONAL CIVIC FEDERATION 

one-half of the net profits of the office, excluding any fees 
earned by myself, to such extent as the total productive hours 
of any one accountant, multiplied by the average salary for 
the year, bears to the aggregate of the same factors arising 
from all other members of the staff. Such amounts are 
set up to the credit of each accountant as soon as the books are 
closed for the year, and are payable 25% as of January 1, 
following the closing of the books, and quarterly thereafter. 

"If any member of the staff leaves the organization during 
a current year, he loses his interest for that year and also 
forfeits any unpaid balance of the prior year's bonus, and 
such forfeitures revert to myself. 

"This plan was started January 1, 1918, and on account 
of many changes in our personnel only five men participated 
for that year. For the year 1919, the number will be slightly 
increased. At present the average number of employees en- 
titled to participate for the year 1920 will perhaps be twelve 
or fifteen. 

"It is really too early to say definitely whether or not 
the plan is entirely acceptable, inasmuch as we are not yet 
ready to announce the outcome of 1919 business, but from 
advance figures it is evident that each of the participants will 
receive between $500 and $750. 

"As our business is of a professional nature, the difficulty 
of obtaining a competent staff is influenced very largely by 
the salary paid. Naturally, with a profit sharing arrange- 
ment, our salaries are not as high as the same men could 
obtain in other places, but with the bonus added, we un- 
doubtedly have relatively as high a salary rate as any other 
concern in the same business, 

"Our two main objects in introducing a profit sharing 
plan have been: First, to impress upon the members of our 
staff the fact that they carry a certain amount of personal 
responsibility, as to the outcome of the engagements which 
they handle for the office, and Second, that if such respon- 
sibilities are properly discharged, a portion of the profits 
accruing to the office will revert to them. We believe our 
plan has met our desires to keep the standard of our work 
as near 100% perfect as possible. 

"It is the writer's observation, that any profit sharing plan, 
in order to be successful., must be laid on definite rules and 



PROFIT SHARING REPORT 295 

regulations, and must call for the participant's interest and 
co-operation, so that it influences even a greater personal in- 
terest on his part than the regular wage or salary." 

The Hinde & Dauch Paper Company, 
fibre shipping boxes and packing materials. 

sandusky, o. 

(1919) From the secretary, November 13: 

"We do not have the profit sharing plan, but several years 
ago we adopted the policy of paying an additional compensa- 
tion on the percentage plan, operating according to the number 
of years of service, and it has enabled us to reduce our labor 
turnover to a very small per cent. The additional compensa- 
tion is based upon length of time of employment, as follows: 

,4 To those employees who began their continuous service 
since the first day of December, 1917, and so remain until 
distribution is made, the amount is based on 5% of the total 
wages earned by them during the year ending November 
30, 1918. 

"To those who have served the company continuously for 
one full year and less than two years, the amount will be 
7%% of the wages earned for the year ending November 
30, 1918. 

'To those who have served this company continuously 
for full two years and up to and including full five years, 
the amount will be 10% of the wages earned for the year 
ending November 30, 1918. 

"To those who have served this company continuously 
for full six years and up to and including full ten years, the 
amount will be 12%% of the wages earned for the year 
ending November 30, 1918. 

"To those who have been in continuous employment far 
more than ten full years the amount will be 15% of the total 
wages earned for the year ending November 30, 1918." 

W. H. McElwain Company. 

MAKERS OF SHOES. BOSTON, MASS. 

(1919) From Clifford R. Warren, secretary, Decern- 
er 1: 



296 THE NATIONAL CIVIC FEDERATION 

"The profit sharing plan of this company was first made 
effective by a letter addressed to the participants in the plan 
in March, 1917. This letter announced that the first distri- 
bution would be of a portion of the earnings of the fiscal 
year ending May 31, 1917, and would be made following the 
close of that year. This plan is confined to the manufac- 
turing division, in which there are about 6,000 employees. 
Members of the general administrative organization are in- 
cluded who receive a salary in excess of a stipulated mini- 
mum, certain members of the factory organization and most 
of the foremen. This is a 'managers' profit sharing plan.' 
The number of persons participating for the fiscal year end- 
ing May 31, 1919, was 229. 

"The company believes that the plan is strongly sup- 
ported by those who participate. Of course, since the plan 
is confined to managers it has no effect on labor disturbances. 
The managers have come to feel they are more directly inter- 
ested in the success of the business. The distribution of 
profits has been in stock of the company, managers who are 
holders of common stock at the time of distribution receiving 
stock of that class, and other managers receiving second pre- 
ferred stock." 

H. Mueller Manufacturing Company. 

WATER, PLUMBING AND GAS BRASS GOODS. DECATUR, ILL. 

(1919) A representative of the firm, November 15: 
"For a number of years past we have paid to each of our 
employees who during that year completed 20 years of con- 
tinuous faithful service the sum of $500, but we do not have 
a plan of profit sharing." 

Oneida Community, Ltd. 
oneida, n. y. 

(1919) G. N. Allen, November 18: 

'We adopted our present wage plan for providing for 
the high cost of living in 1917. The only change since then 
is that beginning September 1, all salaries on the company's 
payroll got the full high cost of living percentage. On Sep- 
tember 1 we gave all employees drawing over $2,000 a 



PROFIT SHARING REPORT 297 

rebate equivalent to the full high cost of living from the time 
we started the plan, and have arranged to give them the full 
percentage monthly thereafter." 
From a "community" booklet: 

Our "high cost of living" plan was put into effect Jan- 
uary 1, 1917. As a basis, we went back to January, 1916, 
when a general wage advance had placed our employees 
(as all agreed) in a position of sharing the company's pros- 
perity. A careful estimate applied to the living expenses 
of a large number of families of differing size and income, 
indicated that the rise of living cost in our community 
during 1916 was about 16%. We therefore announced: 

1. That during the war, and until a period of settled 
prices had been reached, basic wages would be left as in 
January, 1916. 

2. That a separate envelope would be given to each em- 
ployee containing an additional wage which for January 
would be equal to 16% of the regular wages. 

3. That the wages in this special envelope should 
change each month with the change in the average cost of 
living. 

4. That every 20 point change in Bradstreet's index 
number of about one hundred commodities would be as- 
sumed as indicating a change of 1% in the average cost 
of living, the nearest 5 points being considered equivalent 
to % of 1% in actual practice. 

5. That each month the latest Bradstreet number, when 
published, would be posted on factory bulletin boards, to- 
gether with the change of wages indicated for the following 
month by this change of index number. 

For twenty-seven months these special high cost of liv- 
ing envelopes have been maintained on the aforementioned 
basis. 

The fact that more than 2,000 workmen after two years 
of experience with the operation of this plan, agree that the 
"H. C. L." envelope has fully covered increases in their 
living costs, has given us great confidence in the practical 
value of the figures used. 

Phelps Dodge Corporation. 

NEW YORK. 

(1919) Warren Douglas, president, December 8: 
The condition under which we have been operating for 



a 



298 THE NATIONAL CIVIC FEDERATION 

the past four years may not be strictly construed as profit 
sharing, and yet the effect is certainly the same. 

"The wage scale in effect throughout our copper proper- 
ties and which applies not only to wage-earners but to salaried 
employees is based on a minimum rate when the copper metal 
is selling at 13 cents per pound. For each one cent increase 
in the market price for copper, the wages are increased 12% 
cents per day; so that actually the companies are dividing 
with their men a considerable percentage of the profit above 
a market which may be considered as an unprofitable one to 
the industry. 

a As a whole, and particularly among the more intelligent 
class of miners (such as those working in the so-called 'white 
camps') the system is, I think, eminently satisfactory and 
I am sure has had a very direct effect in preventing labor 
troubles during the time it has been in vogue. I cannot state 
that it has been an unqualified success, as while there has been 
no opposition to increases in the rates of labor as the copper 
advanced there has been a distinct reluctance on the part of 
the wage-earners to accept a reduction in the rates when the 
market price declined. The system was originally put into 
effect just before the war, and therefore when the standard 
cost of living was considered to be normal. Since then the 
greatly increased cost of all commodities to the workmen has 
caused the operators to modify the plan; so that, as a matter 
of fact, while copper is to-day selling at 18 to 19 cents per 
pound, the wages being paid are practically on the basis of 
24-cent copper." 

Reid & Hughes Company, 
department store. lawrence, mass. 

(1919) From a representative, November 13: 
"At the end of each month we take 1 % of the total sales 
in each department, divide this by the number of our regular 
employees, and give each an equal share of the commission. 
(Regular employees are those with us the year through — in 
our business we have many extra employees for various sale 
days, etc. We do not consider ourselves obligated to include 
them.) Our office force, porters, drivers, and other non- 
sellers, are given their share of commission each month based 
on the sales and gain in volume of business. 



PROFIT SHARING REPORT 299 

"This plan dates from September 1 of this year. It is as 
yet too early to decide on the merits of the plan, but we feel 
that it will be a success. The employees with but one or two 
exceptions are well pleased. Our employees number about 
85. We hope it will ward off possible labor trouble, but of 
course it is too early to tell yet, and we are not sanguine 
enough to believe that if we kept the 1% and gave our em- 
ployees 99% all would be satisfied. Heads of departments 
and the rank and file share in the plan." 

The Standard Textile Products Company. 

NEW YORK. 

(1919) Alvin Hunsicker, vice-president and general 
manager, November 9 : 

'This company has not as yet any profit sharing plan, 
but it sets aside from its earnings a certain amount which is 
put in a reserve, which is used, in a sense, for profit sharing. 
This percentage as set aside is not fixed annually, but such 
amount as is estimated will be needed each year is set aside. 

"We were one of the first companies to carry group life 
insurance. In this way the family of the employee is pro- 
tected to the extent of receiving, at the death of the employee? 
an amount equivalent to his compensation for the 12 pre- 
ceding months, the maximum limit being $3,000. While not 
all of the men, particularly the single men, see the benefits 
of this plan, we find that it has made a friend for the company 
of the employee's wife, who does appreciate the insurance^ 
and she uses her influence to keep her husband on the job. 

'We operate under the shop committee plan, and in the 
event of an employee becoming incapacitated or upon reach- 
ing the age limit, 70 years, his pension is fixed by the shop 
committee, who are better able to determine what each indi- 
vidual should receive than any fixed plan might determine. 
Our pensions run anywhere from 25% to 50% of full pay. 

'Through the shop committee plan, wages are practically 
fixed by the shop committee based upon the efficiency of the 
employee. It so happens, therefore, that when wages are 
raised some receive double the amount of others, and in some 
instances some receive no increase. It is the policy of the 
company to pay liberal wages, a little better than the average^ 



300 THE NATIONAL CIVIC FEDERATION 

and for skilled men, quite considerably more. This plan has 
kept us from having strikes, has shown the men that we desire 
to he fair and liberal, keeps up a fine spirit of co-operation, 
and as a matter of consequence increases production, the 
increase in production more than offsetting the increases paid 
for efficient sendee. 

"Since 1914 the company has fixed its wages not on a pre- 
war basis nor on the high cost of living basis, but has en- 
deavored to strike a middle line. Salaries are adjusted in 
the regular way on this basis. The difference between the 
middle line and the high cost of living line is made up in 
extra compensation, which is paid quarterly and varies in 
amount, depending upon conditions. This plan applies to all 
on the salary roll, whether at the plants or in the general 
offices. 

"During the war, in order to stimulate production to aid 
the government, we added a premium bonus. This was paid 
to any employee who during the war period, during any one 
year, rendered some extraordinary service that added to pro- 
duction. This premium bonus was in force only two years. 
It was distributed secretly by the general manager, who sub- 
mitted his list to the executive committee. In some instances, 
salaries were almost doubled. Since the armistice this plan 
has been discontinued, but we are inclined to think that we 
may put this plan into operation again on a modified form. 
It had a tendency to bring out the very best in our skilled 
employees. Some of the things accomplished during the 
war have proven to be of great benefit since the war is over. 
In other words, this premium bonus was for high pressure 
work, and in the payment of the bonus as outlined the indi- 
vidual received recognition rather than the company as a 
whole. 

"The company has no fixed plan of sick benefits and yet 
it takes care of all incapacitated employees, charging it 
against the regular fund mentioned above. Each case is taken 
on its own merits and there is no arbitrary rule. 

'We believe that there is no fixed plan of profit sharing 
that is strictly equitable. Any plan that treats the inefficient 
employee the same as the efficient employee is wrong in prin- 
ciple. We therefore are working on a plan that, as we see it, 
takes care of every employee based upon his individual effort. 



PROFIT SHARING REPORT 301 

Our men are graded something similar to the system the 
army uses, so that if a man is low on one point he has a 
number of other points on which to average up. 

"It is our candid belief that the difficulty with labor will 
not be solved on a general plan, but if each company would 
take its own problems and solve them patiently and scien- 
tifically so as to have in the end a satisfied corps of workmen 
the troubles of the country as a whole would be over. In 
any event, the employers will have to be more flexible in their 
dealings with labor, and organized or unionized labor will 
have to be more flexible in dealing with its employers. The 
walking delegate and his powers and the absence of any grad- 
ing in organized labor are two elements that greatly hinder 
its progress, which every right thinking employer is apt to 
strongly combat. We have open shops, but we employ union 
men as well as non-union men, but we have been able to avoid 
labor trouble through proper co-operative methods based 
upon what we regard as right, both parties being considered." 

The United States Printing and Lithograph Company. 

cincinnati. 

(1919) John Omwake, president, November 28: 

'This is a union shop and always has been so. We em- 
ploy 500 in this factory, two-thirds men and one-third girls. 
We instituted a premium system in a couple of departments 
a few years ago, not subject to union rules, which has helped 
to lessen the labor turnover. Generally we think it is satis- 
factory, as labor is ever watchful to see that they get as much 
in wages and premium as they could get elsewhere. 

'We paid for some years a premium to salesmen for book- 
ings of orders in excess of the basis established, and a pre- 
mium to managers and superintendents in the factory for 
increased production. Later we tried to establish this extra 
remuneration on a profit sharing basis, but we have not yet 
been able to find a common basis for distribution that would 
be equally fair to all concerned. 

'We will pay out this year probably $100,000 to man- 
agers, salesmen, superintendents and heads of departments 
generally, but the individual amounts will be made up ac- 



302 THE NATIONAL CIVIC FEDERATION 

cording to merit and not altogether according to profits 
earned." 

William Volker & Co. 

PICTURES, FRAMES, WINDOW SHADES. KANSAS CITY, MO. 

(1919) William Volker, November 28: 

"We have shared profits with some of our employees in 
some form for more than 30 years. Our original method was 
to allot to employees the earnings on a definite amount of 
capital, the minimum being SI, 000; maximum, $25,000; 
allotment according to importance of position held by the 
individual. We found it difficult to make explanation satis- 
factory to beneficiaries why earnings should ever be less for 
one period than at any previous period. The rank and file 
preferred a definite fixed income and our plan was abandoned 
as to these. 

"We are paying our selling force a fixed salary and in 
addition a fixed percentage of the profits on their sales, as 
shown by our profit and loss department. 

"Since July 1, 1917, we sell employees on the instalment 
plan shares of stock with an agreement with the undersigned 
personally to the effect that when employees leave our em- 
ploy shares are purchased by undersigned at book value (par, 
plus undivided profit) with 6% interest from last inventory 
date (January 1 and July 1) to date of transfer." 

Young, Smyth, Field Company, 
notions. philadelphia. 

(1919) Calvin M. Smyth, president, November 11: 
"Our business is one of distribution, not manufacturing, 
and therefore the only skilled persons we employ are buyers, 
department managers and salesmen. Our department man- 
agers all work on a share of profits based on a minimum re- 
quirement of profit before dividing sufficient to insure divi- 
dends. Our salesmen work on a commission strictly, thus 
making their own rate of compensation, but receiving a bonus 
for sales over a previous high record. This is an encourage- 
ment to the younger, growing salesmen more than to those 
already established. We have been working on these plans 



PROFIT SHARING REPORT 303 

for a number of years. We employ about 75 men who are 
interested in the above plans and about 225 who do not share 
in a division of profits but who receive a cash gratuity at 
Christmas time based on years of service and who also are 
benefited by life insurance, increased in amount according 
to years of service. 

"We have no labor troubles, nor have we ever had any. 
We pay our help liberally and look after them when they 
are sick, and have a loyal force with comparatively little 
turnover, except during the war times, when 41 of our young 
men entered the service, and we naturally suffered accord- 
ingly. They are all back now and we anticipate no further 
trouble." 



304 THE NATIONAL CIVIC FEDERATION 



REPORTED IN THE PRESS, NEW YEAR, 1920. 

A clipping service on the subject resulted in considerable 
testimony, about the first of the present year, that many estab- 
lishments throughout the country had widened the scope of 
their bonus payments or profit sharing or had for the first 
time entered upon some variant of extra payment to em- 
ployees, with attendant welfare work, life insurance or kin- 
dred benefits. In general, these newspaper reports have 
lacked essential particulars, a fact apparently due in many 
cases to indefmiteness in the announcements of the employers 
themselves. The statements which follow have been con- 
densed from literally scores of columns of newspaper matter 
on the subject. 

The banks of the country seem not only to have generally 
paid the bonus hitherto expected by the employees of large 
financial institutions, but in cases to have ventured further 
into the sphere of systematic profit sharing. In a review of 
this phase of changing methods, the New York "Journal of 
Commerce," January 13, 1920, gave serious consideration to 
the topic as discussed "during the past few months." It said: 
"There has been a great deal of unrest among bank em- 
ployees, not only in this city but throughout the United States. 
The effort of the American Federation of Labor to unionize 
them has been unsuccessful, at least in any large way, but 
chiefly so on account of the fact that banks, particularly in 
New York City, promptly took in hand the question of meet- 
ing the view of the employees and convincing them that they 
were being paid in proportion to the increased earning powers 
of the institutions." The article further stated that the bonus 
system in its most recently developed form is now applied 
quarterly. A good many banks were paying a so-called cost- 
of-living bonus, intended to make the purchasing power of 
the employee's salary stable. A comparatively few banks 
had established profit sharing in its purity, "although it is 
assumed that when prices are rising and business is active 
the percentage allotment will be larger and so will in a sense 
constitute a cost-of-living allowance." 



PROFIT SHARING REPORT 



305 



On the whole, in its reports relating to profit sharing, the 
press of the country is reflecting a somewhat undefined move- 
ment and not a systematic carrying out of a clear-cut plan. 
To the newspaper headwriter, "profit sharing" serves to de- 
nominate almost any benefit extended from the employer to 
the employee. 

The Fourth National Bank, Atlanta, Ga., distributed to its 
entire corps of employees $10,826. Eight years' service 
brought 12% of the salary; seven years', 11%, the diminish- 
ing ratio reaching 4%. A supplement of 2% was further 
made for the past year. 

The First National Bank, St. Paul, Minn., set aside stock 
for dividend purposes for employees at less than $3,000 a 
year, voluntarily to be drawn upon in proportion to salaries. 
For the first time, junior officers are permitted to purchase 
stock. 

The First National Bank and the Federal Trust Company 
of San Francisco adopted identical profit sharing plans. By 
the method adopted, 20% of the residue of the net profits is 
appropriated to the share of the employees. One half is dis- 
tributed in a ratio to the total salaries of the banking depart- 
ment, the other half in proportion to term of service. The 
older employees received as high as 35% of their annual 
wage. In addition, an allowance was made to meet the rising 
cost of living; married employees, 12%; others, 8%. Sal- 
aries were to continue in case of illness. 

The Emporia Bank, Topeka, Kans., announced a profit 
sharing plan, the profits to be used in organizing a trust com- 
pany, one half the stock to be held by the bank's employees 
and half by stockholders. 

The Ensley Bank, Birmingham, Ala., adopted a plan of 
sharing profits with "every employee depending upon his own 
work and enthusiasm." It is described as simple and precise. 

Wm. Demuth & Co., Richmond Hill, Long Island, manu- 
facturers of pipes and smokers' articles, employing 1,000 
men and women, installed in April, 1917, a system of divid- 
ing the value of the increase of production arising through 
improved organization, gang working and other efficiency 
methods. The profits resulting from increased output and 
economies are distributed every two weeks in cash, the divi- 
sion on occasion reaching 15% of regular wages. The plant 



306 THE NATIONAL CIVIC FEDERATION 

also has group insurance and a sick benefit fund. The merits 
of the recent strike have not been investigated. 

The "Daily Sentinel," Lewistown, Pa., H. J. Fosnot & 
Son, publishers, after experimenting with profit sharing for 
two years decided to give employees "a voice in the manage- 
ment of the business." No particulars. 

The Wilkes-Barre, Pa., 'Times-Leader" established a 
profit sharing plan by which profits are to be shared equally 
between the proprietors and their "associates." A "substan- 
tial percentage" was paid on the year's salaries. 

The Salt Lake 'Telegram" announced a sharing of the 
profits to the extent of 50% with its employees. "This will 
mean a bonus of more than $300 for each employee." 

John L. Thompson Sons & Co., druggists, Troy, N. Y., 
recapitalized at $1,000,000, proposed a distribution of stock 
to the employees by subscription on an easy payment plan. 
The right to subscribe was based upon service, loyalty and 
efficiency. 

The Furst-McNess Company, manufacturers of medicines,, 
flavoring extracts, etc., established group insurance, the aver- 
age for married employees being $1,400, as well as a profit 
sharing plan by which deposits made by employees would be 
supplemented by the company at 6% interest paid on the total. 

The C. W. Ferguson Collar Company, Troy, N. Y., organ- 
ized four "I Am Producing More" teams. The firm is to set 
aside weekly a sum of money to be paid a team for excess of 
its normal production, with extra prize money to the teams 
in the lead. There is also to be a week's vacation for all em- 
ployees, with pay based on weekly average earnings. 

M. Rich & Bros., department store, Atlanta, Ga., an- 
nounced, in giving $87,000 in bonuses to 300 employees, that 
thenceforth the latter would be given an opportunity to buy 
7% preferred stock in the store "on a liberal basis." 

The Manufacturers' Trust Company, New York, adopted 
the plan of declaring dividends for employees at the same 
rate on their salaries as paid to stockholders on stock, the rate 
probably to be 10% or 12%. 

The Apperson Bros. Automobile Company, New York, 
announced 25% of the net profit to go to employees. "*n 
each man's pay envelope every week is a message from the 



PROFIT SHARING REPORT 307 

executives pointing out how he can increase his share of the 
profits — or decrease them." 

The Bridgeman-Russell Company, Duluth, Minn., in giv- 
ing bonuses ranging from 3% to 10% on salaries, made the 
payments in company notes payable in three years bearing 
5% interest. The notes range from $30 to $300, a total of 
$18,000. The number of employees is 230. 

Davis, Borland & Co., New York, insurance agents and 
brokers, announced to 73 employees a "true participation in 
profits which was not to be in any sense a high-cost-of -living 
contribution." 

The Dutchess Bleachery, Inc., Wappingers Falls, N. Y., 
decided to "split the profits of the local plant fifty-fifty," the 
employees to draw their profits each month. "Every em- 
ployee in the plant from the agent to the office boy will be 
practically a stockholder." "A certain amount is to be de- 
ducted for different funds from time to time, and in the case 
of a shutdown the employees will receive a portion of their 
pay during the idle time." 

I. Ginsburg & Bros., International Dress Company, began 
dividing monthly 50% of their profits in 20 factories located 
in various states, a final accounting to take place at the end 
of each year. A welfare committee of employees was estab- 
lished, together with a life insurance for $500 for women 
employees and a nursing service. 

The Holsum Bakery, Los Angeles, Cal., began profit shar- 
ing on a basis of both term of service and salary. 

F. C. Huyck & Sons, cloth mill, Rensselaer, N. Y., was to 
apportion shares among the employees according to the length 
of service and the amount of salary of each. 

The Hohlfeld Manufacturing Company, Philadelphia, an- 
nounced a profit sharing, group insurance, reward system 
for regularity and productivity, and welfare plan. Stock 
could be subscribed for in amounts ranging from $100 to 
$1,000, payable $2 a week; the firm to set aside for the 
purchaser an equal amount in stock, the total when paid up 
to become the property of the worker. 

The Miller Metal Works, Southington, Conn., announced 
profits for the employees for 1920. 

The Merchants' Refrigerator Company, New York, Jersey 
City and Newark, announced a combination of profit sharing 



308 THE NATIONAL CIVIC FEDERATION 

and bonus wages and life insurance. The company was to 
issue "employees' certificates of investment," to pay an an- 
nual rate of 6%. 

The Morse Chain Co., Ithaca, N. Y., with 670 employees, 
proposed to establish a dividend on wages at the same rate as 
drawn by the stockholders. 

Arthur Nash, president of the A. Nash Company, tailors, 
of Cincinnati, announced on March 18, 1920, to his four 
hundred employees that beginning at once the net profits of 
the business would be equally divided between the company 
and the employees after 7% has been paid on the investment 
and the employees had received the regular union scale of 
wages. 

The Emil-Olcovich Companies, shoe stores, in Los An- 
geles, installed a cash dividend method, with supplement 
every three months. "Sales and deportment" were to be the 
qualifications. Besides, an insurance for $1,000 for each 
employee was provided. 

The Passaic Print Works, January 31, established a plan 
by which every three months a bonus was to be paid em- 
ployees from which they could subscribe for profit sharing 
certificates to the value of $100, $200 and $500. Interest 
on the deposits for the purchase of certificates is to be 4%, 
and there would be credited on the certificates 6%. 

The D. Pender Grocery Company, Norf oik, Va., announced 
that it would share half and half in all profits above 2% on 
the turnover with its 265 employees, who were to have a 
representative on the board of directors. 

The employees of the Underwood Typewriter Company 
are to receive April 1, 1920, 20% of the net surplus of the 
company for the year 1919. The distribution will be made 
in common stock of the company, if obtainable, or in United 
States government bonds or in both. The company paid to 
the trustees for distribution among the employees as extra 
compensation $293,397 for 1916, $327,633 for 1917 and 
$376,836 for 1918, a total of $997,897. Emplovees' sub- 
scriptions in 1917 amounted to $108,484; in 1918,' $93,413, 
and in 1919, $60,000, a total of $262,000. There were 2,959 
shares of stock issued to the employees during 1917, 4.224 
during 1918 and 3,971 in 1919, a total of 11,154. 



PROFIT SHARING REPORT 309 

Thirteen thousand wage-workers of the Willys-Overland 
automobile plant were notified January 3 that the distribution 
of profits arranged for a year previously had been deferred 
"because of the fact that there were no profits, due to labor 
trouble," which began last May. The company declared, 
however, that the plan had not been abandoned but a new 
draft was to be made early in 1920. A distribution of $41,400 
was made among the employees a short time before the labor 
difficulty arose. 



310 THE NATIONAL CIVIC FEDERATION 



ABANDONED PLANS. 

A test of profit sharing — or, at least, alleged profit shar- 
ing — is arrived at through examining not only plans, new as 
well as old, now in operation but the circumstances in which 
dead plans have been abandoned. 

In the statements regarding methods now practiced, many 
companies mention their previous try-outs of other methods. 

Lists of failures may be found in N. P. Oilman's "A Divi- 
dend to Labor" and his "Profit Sharing Between Employer 
and Employee," and also in Sedley Taylor's "Profit Sharing" 
and the reports of the British Board of Trade on "Profit 
Sharing and Labor Co-partnership in the United Kingdom" 
and "Profit Sharing and Labor Co-partnership Abroad." 

A score or more of the plans mentioned in the 1916 edi- 
tion of this work have been omitted from the present edition. 
Repeated requests to their managers to give information as 
to the outcome of their respective experiments to date have 
brought no reply. It is possible that such ventures are deemed 
by those responsible for them as hardly worth recording. 

[The date (1916) indicates that the printed matter fol- 
lowing appeared in the edition of this book for that year; 
(1919) or (1920) indicates the date of the new report. A 
date in a sub-heading indicates the year in which the 
experiment under notice began.] 

Among abandoned experiments of considerable promi- 
nence are the following: 

American Smelting and Refining Company. 

new YORK. 1903. 

(1916) Some years ago, when very satisfactory profits 
were being earned, the company distributed yearly bonuses, 
based on percentages of wages, to all heads of departments 
and employees down to and including the rank of foreman. 
The total distribution in 1905 amounted to about $200,000. 



PROFIT SHARING REPORT 311 

The company does not assign a reason for discontinuance of 
the plan, other than that implied in the reference to dimin- 
ished net earnings in recent years. 

E. C. Atkins & Co. 

SILVER STEEL SAWS. INDIANAPOLIS, IND. 

(1919) H. C. Atkins, president, November 15': 
,4 We are not at the present time operating a profit sharing 
plan. We are now employing in our main factory at Indian- 
apolis, on the factory payroll, in the neighborhood of 1,200 
men. 

"In 1891 we did inaugurate a profit sharing plan, and 
carried it out for two years. At the end of two years, after 
paying our employees their share under that plan, the plan 
was discontinued, and we have never since that time felt en- 
thusiastic about duplicating our experience. The basis of 
our plan at that time was as follows: 

"1. Wages to our entire force, including office em- 
ployees, heads of departments, foreman and workmen, 
were paid weekly. The wage rates were the current wages 
paid in kindred industries, or in our locality. 

"2. The management considered that the firm was en- 
titled to a return of 8% on its investment before there 
should be any sharing of profits between the investment 
and the workers. 

"3. After the workers had received their regular wages, 
and after 8% on the investment had been earned to cover 
the returns for capital invested and a very small percent- 
age for betterments, sinking fund and depreciation, which 
by the way, was included in the 8%, the surplus remaining 
out of the net profits of the enterprise were distributed 
share and share alike to the workers and to the investment. 
The basis on which this distribution was made was on the 
basis of dollars of payroll for the year, and dollars of in- 
vestment for the year. In other words, if our payroll 
amounted to $100,000 and our investment amounted to 
$200,000 and we had $15,000 of surplus to divide, the 
workers got $5,000 and the investment got $10,000. 

"As noted above, this plan was carried out for two years. 
During the first year it was distinctly understood in the rules 
of the game that members of labor organizations would be 
barred from participating in the profits. At the end of the 



312 THE NATIONAL CIVIC FEDERATION 

period this restriction was withdrawn and they were allowed 
to participate regardless of their affiliation with labor organ- 
izations. 

"At the end of the second year, when the payment was 
made, a request came in from the only labor organization 
which we had in our works at that time, demanding that a 
committee of their organization be allowed to examine the 
books and accounts of the company with a view of determin- 
ing whether they had been cheated or not, and they were 
insistent that they should have a representative on the board 
of directors. 

"Our experience from a selfish standpoint, on the theory 
that participation in the profits would give us a better and 
more conscientious working force was unfortunate. We got 
no more loyal support than we had before. There was a con- 
tinual murmur that indicated a state of mind on the part of 
the workers that the profits were too large, as they were in a 
measure let into the secrets of the business in so far as profits 
are concerned. 

'This was well illustrated by one case, that of a man who 
left our employ to go into the employ of a neighbor manu- 
facturer. Our neighbor manufacturer asked him why he left 
Atkins, who offered him a profit sharing arrangement. His 
answer was, that in so far as the extra share of profits were 
concerned it had increased his pay 6%, but he added: 'Think 
what those rascals get!' referring to the investment end of the 
business. 

,4 The very fact that the business was prospering made a 
state of mind among the workers leading to unrest, and to 
exceptional demands which we had not experienced up to that 
time. We found that it was making in our business more dis- 
turbance than otherwise, and after very careful consideration, 
and a great deal of regret, because we had high ideas about 
the operation of such a system, we discontinued it and made 
up our minds to pay reasonable wages for reasonable work 
and let it go at that, and we believe we have been freer from 
ugly developments in our business since then than we were 
before. 

"Our basis of profit sharing was really an expensive one 
from the investment standpoint, as we did not allow the in- 
vestment a sufficient return before dividing the profits. It 



PROFIT SHARING REPORT 313 

would have resulted in 'bleeding' the business beyond its 
capacity to take care of the out-go. 

'To sum up our experience, the profit sharing plan in our 
business tended to unrest, did not accomplish its purpose in 
satisfying the employees any more than they were satisfied 
before, and did not accomplish the purpose of tying up to us 
a loyal crew of workmen, whose only thought was an extra 
profit for good work and quantity production. 

''We have been able to get the quantity production and 
loyal services, together with quality production, by making 
individual arrangements based on that outcome, in a much 
more satisfactory manner." 

B. F. Avery & Sons. 

TILLAGE IMPLEMENTS AND HARVESTING MACHINERY. 

LOUISVILLE, KY. 

(1919) C. F. Huhlein, president, November 18: 
"Several years ago we inaugurated a semi-annual bonus, 
based on a percentage of wages earned. The experiment 
was not satisfactory and was discontinued. While the bonus 
was relished, and we think approved by most of our men, 
agitators seemed to convince them that the bonus was in 
reality wages withheld, and we were led to believe that the 
men desired to have in their weekly pay envelope all they 
were entitled to or expected to receive. 

'We employ nearly 1,000 men in our factory and about 
300 men and women in the office and branch house employ- 
ments, mainly salesmen, clerks and shippers. At this time 
we are inclined to believe that profit sharing if applied to 
heads of departments would be wise, and that as to the rank 
and file the best form of extra compensation would be by in- 
cluding the sum in the weekly or monthly pay envelopes, said 
extra sum or bonus being a fixed sum based on the estimated 
profits of the current year, or current season, or arbitrarily 
set aside from the profits of the preceding year or years; the 
rank and file being informed just how or whence the sum to 
be apportioned is derived and that the continuance of the pay- 
ment depends upon the loyalty and efficiency of the individual 
employee and the development and prosperity of the business 
as experienced from month to month. 



314 THE NATIONAL CIVIC FEDERATION 

"Our idea is that the average wage-worker or salaried 
worker does not possess enough vision, faith, patience or 
financial strength to wait contentedly for the end of a fiscal 
year, and that any bonus, loyal service dividend or profit 
sharing reward, in any form, would better be given weekly 
or monthly on regular pay days. In other words, let the em- 
ployer show his faith and zeal in this direction by setting 
aside, in advance instead of at the end of a fiscal year, a 
premium, bonus, or profit sharing fund, with the announce- 
ment that so long as operations go along favorably and he 
feels justified in doing so, the sharing will be continued, and 
that it will be discontinued, modified or reduced as he may 
find justified from time to time, in his discretion. 

"Something must be done to stimulate increased loyalty 
and efficiency, and, after several years of study and thought 
on this subject, I feel that I have the germ of a good program 
so far as this locality is concerned." 

The Baldwin Locomotive Works, 
philadelphia, pa. 

(1916) In June, 1914, an officer of the company ex- 
plained its stock subscription plan as follows: 

"Leading men have been sold stock on a basis of 4% 
for money involved, workmen preferred. Highest possi- 
ble wages to be paid regularly. Employees have the priv- 
ilege of deposiitng their savings at 4% interest, money 
can be drawn on demand without previous notice. No at- 
tempt is made to interfere with the private affairs of 
workmen." 

In February, 1916, the president of the company states 
that the plan has been discontinued for the following reason: 

"By reason of the large advances in the market values 
of our common stock, it became profitable to our em- 
ployees to sell their holdings and liquidate their obliga- 
tions to us. Therefore all of the beneficiaries of the ar- 
rangement have terminated their obligations and the em- 
ployees share fund has been closed." 



profit sharing report 315 

Boston Elevated Railway Company, 
boston, mass. 1902. 

(1916) Employees engaged in car service, in the em- 
ploy of the company for six months and having a clean rec- 
ord, were eligible for payments from a bonus fund set aside 
each year. About 4,000 employees shared in the annual dis- 
tribution, averaging about $15 per man. Since entering 
upon contract relations with the Amalgamated Association of 
Street and Electric Railway Employees this extra distribution 
has been discontinued. 

Boston Herald, 
boston, mass. 1887. 

(1916) The proprietor who inaugurated the plan for 
the 300 employees retired soon thereafter. Financial em- 
barrassment of the firm not only delayed the first distribution 
but necessitated the reduction of the rate originally contem- 
plated. The result was unsatisfactory and the scheme was 
not continued (N. P. Gilman). The treasurer writes that the 
"Herald" has no profit sharing plan and never had one that 
became operative, March 29, 1916. 

Brewster & Co. 
carriage builders, new york. 1869-1872. 

(1916) This firm was one of the pioneers in profit shar- 
ing in this country. The extreme care with which their plan 
was prepared, the favorable auspices under which it was 
inaugurated and the ill-fate which attended it make it of more 
than passing interest. 

In October, 1869, the firm submitted, in a proposal for 
an "industrial partnership" with its employees, the following 
percentage of profits plan, drawn up by them in conjunction 
with John Stuart Mill and John Bright of England: 

The percentage of profits which labor was to receive 
was determined jointly by the firm and a committee of ten 
employees elected by the shop. The amount agreed upon 
by them was 10% of the net annual profit, which was dis- 
tributed among the employees in proportion to the wages 



316 THE NATIONAL CIVIC FEDERATION 

earned by them respectively, the persons to share in the 
fund to be determined by the employees: The latter or- 
ganized the "Brewster & Co. Industrial Association," and 
adopted a constitution which contained a proposition as 
follows: 

"Neither this association nor any member thereof other 
than its president shall have any voice or authority in the 
management of the business of Brewster & Co.: nor shall 
this association, nor any member thereof, have the right to 
bring suit against the firm of Brewster & Co., or any mem- 
ber of said firm, in any court of law or equity, to de- 
termine or recover the amount of any share or shares in 
the moneys mentioned in the preamble of this constitu- 
tion; and it is expressly understood that the wages agreed 
to be paid by Brewster & Co. shall be a full compensation 
for all services rendered bv anv member of this associa- 
tion while in the employ of Brewster & Co." 

In presenting the profit sharing plan to their employees, 
Brewster & Co. said: 

"Recognizing the importance of harmonious action in 
business operations, and believing that the interests of labor 
and capital are not necessarily antagonistic, but on the 
contrary can be made identical in many important re- 
spects, we have been considering and maturing a plan for 
the reorganization of the manufacturing departments of 
our business, in such manner that labor shall receive, in 
addition to ordinary wages, a portion of the profits accru- 
ing to capital." 

Here follow the details of the plan, and the announcement 
continues as follows: 

"In conclusion, we wish it to be distinctly understood, 
that, in offering this plan for your consideration, we do not 
claim to be prompted solely by the interests of those in 
our employ; on the contrary, we have faith that it will 
serve the interests of all concerned and are free to say 
that we believe we shall be gainers in proportion to your 
gains; and we pledge ourselves that if this experiment dur- 
ing the first year shall confirm us in this belief we shall 
make such further concessions to labor's share as will 
satisfy the shop of our faith in our plan. 

"One word more. We make this proposition at a period 
of profound peace in our shop — when there are no ugly 
questions to be answered, or demands to be silenced by it; 
it is wholly a voluntary act on our part. Nor do we come 
to you with this offer suffering from any disaster, dis- 
appointment, or even discontent, for our business is al- 



PROFIT SHARING REPORT 317 

ready the largest of its kind in the United States, and our 
last year was in every way the most successful that we 
ever experienced. We do not, therefore, invite your co- 
operation in order to restore a lost or impaired business 
or to make good a deficit capital; but, in our prosperity 
and success, we do it for our mutual benefit and that to- 
gether we may demonstrate that neither labor nor capital 
can ever so efficiently promote its own advantage as when 
it seeks it in harmony with the other and with generous 
regard for the interest of the other." 

In explaining the discontinuance of the plan the firm said : 

"We are sorry to say that it proved to be a failure, 
the men not being able to withstand the pressure from a 
general strike in the trade to join the outside movement. 
To show their foolishness and general disregard for their 
own welfare, had they waited two weeks longer they would 
have been entitled to receive some $10,000 to be divided 
among them. The generation then in charge of the busi- 
ness considered that the movement was a failure and 
gave it up." 

(Discontinued in 1872, when there was an eight-hour 
strike. ) 

British Columbia Electric Railway Company, Ltd. 

vancouver, b. c. 

(1919) Ernest Rogers, chief clerk, November 20: 
"We have no system of profit sharing among our em- 
ployees at the present time. Commencing in 1902, the direc- 
tors of the company made arrangements whereby any profit 
available for dividend, after paying 4% dividend on the 
ordinary shares of the company, should be allocated as to 
one-third to the employees of the company, each employee 
receiving an equal amount irrespective of his rank in the 
company's service. The company's financial year ends on 
June 30, and the bonus distribution for the year was made in 
the following October or November. The only condition re- 
quired of those sharing in the bonus was that they must have 
been in the continuous employ of the company throughout 
the whole of the financial year from the profits of which the 
distribution was made and remain in the employ of the com- 
pany until the date of distribution of such profits. The sums 
divided in this way during the period in which this bonus was 



318 THE NATIONAL CIVIC FEDERATION 

effective were as follows: 1903, $25 to each employee; 
1904, $35; 1905, $40; 1906, $45; 1907, $63; 1908, $66.78; 
1909, $58.10. The object of the fund was to give each em- 
ployee some interest in the profits as an encouragement to 
good service, and we found that the distribution of the bonus 
had an important effect upon the quality of the work done, 
besides being very real evidence of the good relations existing 
between the company and its employees. 

"In 1910, at the request of the employees, this profit shar- 
ing scheme was discontinued, and the loss to the men was 
adjusted by an increase in their wages. Had the employees 
at that time not preferred that their wages should be increased 
but that the bonus should be continued, it would nevertheless 
have automatically ceased after the end of the fiscal year 
ending June 30, 1914, as since that time we have paid no 
dividends on our deferred ordinary stock, and no funds would 
therefore have been available for distribution of the bonus." 

Butler Brothers, 
wholesalers of general merchandise. st. louis. 

(1919) Joseph R. Barroil, manager, November 15: 
"Butler Brothers adopted a proht sharing plan for em- 
ployees in 1903. We continued it up to and including 1912, 
when we discontinued it through lack of interest on the part 
of our employees. Our plan was to give every employee who 
had been in our employ for one calendar year a percentage 
of his total salary ; for this purpose they were placed in three 
groups, A, B and C, the rating of each group being made up 
from records of efficiency, punctuality and attendance. As a 
novelty for the first two or three years it did help us to secure 
greater efficiency and to minimize 'absence without excuse,' 
but very soon the employees began to look upon the profit 
sharing cheque as part of their earnings which was held out 
and paid to them at the end of the year. Our experience was 
not good enough to warrant us in continuing the plan, and 
since discontinuing it we have found no acceptable substi- 
tute." 



PROFIT SHARING REPORT 319 

i 

Champion Spark Plug Company, 
toledo, ohio. 1915. 

(1916) The plan is a cash distribution twice a year and 
is based upon wages earned, length of service, attendance, etc. 

To a certain percentage of the total wage is added the 
total saving made by reduction in waste, spoilage, scrap, etc., 
— a careful record of this being kept in proportion to the 
output of the plant. 

In the case of the department heads and sales force, the 
amount is directly dependent upon results, carefully tabulated 
and compared for each six months' period. 

Approximately 300 employees of this company, including 
salesmen, foremen, managers and other employees of the 
factory participated on January 15, 1916, in the first profit 
sharing distribution. 

The president states: "So far we consider the profit 
sharing plan with our employees a decided success, although 
we shall unquestionably see a way of improving the method 
of handling this as time goes on." 

(1919) F. D. Stranahan, treasurer, November 12: 

"The profit sharing was discontinued because of claim it 
should be in the weekly pay envelope and not held for semi- 
annual distribution. This notwithstanding our wage outside 
of the profit sharing was better than prevailed in our locality 
for similar work, and difficulty really came from outside in- 
terference through distorting facts in an effort to create dis- 
satisfaction." 

The Columbus Railway, Power and Light Company, 
columbus, ohio. 1900-1913. 

(1916) In 1900 this company inaugurated a profit shar- 
ing plan by giving a bonus to its employees ; but the plan was 
abandoned in 1913 and the amounts formerly paid were 
added to the weekly wage; the reason being, as the company 
states, that a great many employees preferred to receive the 
money in an increased wage rather than to have it show as a 
gift pure and simple, which it did under the profit sharing 
scheme. 



320 the national civic federation 

The Crump Label Company, 
montclair, n. j. 1890-1892. 

(1916) Ten per cent of the earnings of the company 
was distributed to the employees, the distribution being based 
upon a percentage of the salary of each employee who had 
been with the company for a period of one year. The com- 
pany had 225 employees, but discontinued business in 1892. 

The president of the company states that during the short 
time the plan was in operation "it worked advantageously as 
a great and cheerful stimulant." 

Cunninghams and Co., Ltd. 

window glass manufacturers. pittsburgh, pa. 1905. 

(1916) The company was reported to have entered into 
a profit sharing arrangement with its workmen, whereby $20 
a week was to be paid to blowers and $15 to gatherers during 
continuance of the blast. After disposal of the product 10% 
of the net earnings was to be deducted for running expenses 
and the balance shared with the workmen. Many were ex- 
pecting a large dividend, but the sales were made at prices 
which left nothing for distribution to labor, and it was stated 
that much dissatisfaction developed in consequence. 

CUSHMAN-HOLLIS COMPANY. 
AUBURN, ME. 1891. 

(1916) The Ara Cushman Company had a co-operative 
plan in operation from 1891 to 1893, when, owing to the ap- 
parent disposition on the part of their employees to disregard 
its intent and benefits, and also owing to unfortunate labor 
troubles, the plan was discontinued. 

In 1903 the Ara Cushman Company was succeeded by 
the Cushman-Hollis Company, which has no profit sharing 
plan at the present time, according to the statement of its 
vice-president. 



PROFIT SHARING REPORT 321 

Henry A. Dix & Sons Company. 

MANUFACTURERS OF UNIFORMS. NEW YORK. 1914. 

(1916) In February, 1914, the company distributed 
about $10,000 among 400 employees in the form of a divi- 
dend of 6% upon their yearly earnings, with the addition of 
a "length bonus" in proportion to the number of years of 
service. The company states that it is doubtful whether the 
plan will be continued, as it has only been tried once, but that 
it prefers not to go into the details of the reasons for this 
decision. 

Driver-Harris Wire Company, 
harrison, n. j. 

(1916) About nine years ago this company had in 
operation a system of profit sharing which was abandoned for 
the following reason, as stated by the president of the com- 
pany: 

"It did not seem to work well and it did not appear to 
us that it was appreciated. To 'cap the climax' there was 
a threatened strike in our works and when that condition 
presented itself, we immediately decided to terminate this 
plan." 

The company is giving further attention to the idea, how- 
ever, and hopes at some future time to develop a profit shar- 
ing plan which will be mutually advantageous. 

Emery and Marshall Company, 
manufacturers of women's goodyear welt. 

haverhill, mass. 

(1916) For about four years the company had in opera- 
tion a bonus plan whereby it paid to each employee who had 
been in the service one year I % of the wages earned during 
the preceding twelve months. The company states that it 
believed it had a fine plan and that it would accomplish cer- 
tain results, but that a large proportion of the employees did 
not appreciate it, and "in order to get at the ones who did 



322 THE NATIONAL CIVIC FEDERATION 

not appreciate what we had done we were obliged to discon- 
tinue this plan." 

Erie City Iron Works. 

ERIE, PA. 

(1919) E. P. Selden, vice-president, November 25: 

"We have carefully, and for a number of years, con- 
sidered this question of profit sharing with our employees, 
but have not been able to evolve a satisfactory plan. Our rule 
has been to pay full local rates, and by welfare work and 
making the shop conditions favorable and agreeable to our 
men we have succeeded well, for the most part, in keeping 
our force. 

"During the war period, when so many men were attracted 
by the extravagant wages paid in munition shops, we met the 
prevailing difficulty in holding our men, and during the latter 
part of the year 1918 we paid a bonus for attendance. This 
was paid through January and February of 1919, and was 
then dropped, as the results did not justify its further con- 
tinuance. We have at the present time an average of about 
750 employees all told; 650 participated in the bonus re- 
ferred to above. 

"The impression prevails that if we have any extra money 
to pay out it should be paid in the form of regular wage and 
not as a bonus. As for modifying labor troubles, we did not 
see that there was any special benefit from the payment of 
the bonus which was paid to the workmen in the shops. 

'Up to the present time the most satisfactory plan, as far 
as our experience goes, is to let the workman know every 
week just what he is to receive and pay him the entire amount 
as a wage, either for day work or piece work, as the case 
may be. 

"During the last five years the advance in wages to the 
men in the shop averages 120 per cent." 

Fox Machine Company. 

JACKSON, MICH. 

(1919) W. R. Fox, proprietor, November 13: 
'We had in operation a plan to divide 1 % of the amount 
«of sales in excess of $25,000 per month, dividing this among 



PROFIT SHARING REPORT 323 

ten of the department heads, giving each 1%. We discon- 
tinued that a year ago. At the present time we have no profit 
sharing plan in operation. Formerly we divided one-third 
of the profits of the business among the department heads, 
but there was considerable dissatisfaction, and we have almost 
reached the conclusion that a man working by the day wants 
to see his profits at the end of the week, and the man working 
on a salary is all the time raising the question of whether there 
are going to be any profits. I think the profit sharing plan 
is harder to work now than it was before the war." 

Fulton Bag and Cotton Mills, 
atlanta, ga. 1912. 

(1916) For the first three months of employment, each 
employee receives at the end of that period a premium or 
bonus of 3% of the wages earned. At the end of the second 
three months, he receives a bonus of 5% of the wages earned 
during that period, and at the end of the next six months, 
which would complete one year's employment, he receives a 
premium of 7% of his wages during the preceding six months. 
Each six months thereafter he receives this 7% premium. All 
employees on the company's pay roll, with the exception of 
those in the office, are eligible to this premium. 

(1919) The company president writes, October 3: 
"We have discontinued all of these, as we did not find 
them of advantage. We have not at the present time any 
similar scheme in mind." 

Sir Christopher Furness. 

wingate collieries. irvin shipbuilding co. 

(See Experience in England.) 

P. H. Glatfelter Company. 

PAPER MANUFACTURERS. SPRING GROVE, PA. 1916. 

(1916) The company introduced a profit sharing plan 
in January, based upon wages and length of service. All the 
215 employees are eligible. It is stated that employees who 
have been with the company one year will receive a cash divi- 



324 THE NATIONAL CIVIC FEDERATION 

dend on their wages earned during that period, equal to the 
rate paid on the company's stock. The company states that 
continuance of the plan will depend upon whether, at the end 
of the year, it has proved a success. 

(1919) P. H. Glatfelter, October 8: 

'We have given up our profit sharing plan inasmuch as 
the employees did not seem to want to participate in the profits 
of the company, but instead desired an increase in wages. 
The plan we used was that of declaring the same percentage 
to the employee on his wages every six months as was de- 
clared to the stockholders of the company, which we thought 
would be a very satisfactory basis to work upon. However, 
before starting the profit sharing system, the wages of every 
employee in the place were increased. 

'We were compelled to do away with the plan due to the 
unusually high wages demanded during the war, and at the 
present time we are still continuing to pay the same wages, 
and we do not know when we will go back to our old profit 
sharing plan." 

The E. Guthrie Company. 

WHOLESALE AND RETAIL DRY GOODS. PADUCAH, KY. 

(1916) Every six months 1% of the total cash sales 
was distributed among all the employees in proportion to 
salaries. The company states: "We found that our employees 
did not appreciate this and we have discontinued the plan." 

C. F. Hall Company. 

DEPARTMENT STORE. ELGIN AND DUNDEE, ILL. 1902. 

(1916) Every six months the company makes a distri- 
bution among all its clerks of 1 % of its cash sales during that 
period. The basis of distribution is the amount of wages 
received by each clerk, and it aggregates about the equivalent 
of a month's wages. 

The company regards the plan as successful and states 
that from 1902 to 1914 it has distributed to its clerks under 
the plan approximately $13,000. 

(1919) F. F. Hall, October 14: 

'The plan which we had in operation for ten years previ- 
ous to our fire in 1914, but discontinued thereafter, was not 



PROFIT SHARING REPORT 325 

strictly speaking a profit sharing plan, since it consisted sim- 
ply in the distribution to employees, on the basis of the wages 
which each received of 1 % of the total gross sales of the store. 
This distribution was made semi-annually and was always 
made the occasion of a festivity, the expenses of which were 
borne by the firm. 

4 We felt that one advantage of the plan over that of pay- 
ing employees a percentage on individual sales was that it 
gave employees a working interest in the store as a whole s 
since they knew they would get their share of sales wherever 
made. 

"During the time that we operated this plan we distrib- 
uted to employees something like $10,000, our sales for that 
period averaging about $100,000 per year. 

"One of our rules was that, to share in the dividend an 
employee must remain to the end of the six months' period; 
leaving before that time he forfeited his share of the divi- 
dend, which was distributed among the remaining employees." 

Heebner & Sons. 
manufacturers of threshers. lansdale, pa. 1913. 

(1916) After a fair profit on the year's business is re- 
served by the proprietor, a voluntary distribution is made to 
employees, in the form of a stated percentage on their yearly 
earnings. In 1913, 10% on wages was paid to 80 em- 
ployees; in 1914 and 1915, 12%. The proprietor states: 
"We think it a success, inasmuch as it is an incentive to our 
employees to see that our business is profitable. If it is not 
profitable, they will get nothing above their wages." 

(1919) From a representative of the firm, Septem- 
ber 5: 

"We have not given any bonus to our employees during 
the past three years. For several years we had given them 
a bonus of 10%, 12% and then finally 15%, on their entire 
wages for the year, giving to every employee, and heads of 
departments the same. But it did not seem appreciated, and 
therefore we were obliged to increase wages and then could 
not afford to pay a bonus at the end of the year." 



326 the national civic federation 

Hershey Chocolate Company, 
hershey, pa. 1908. 

(1916) At the end of each fiscal period, a sum is set 
aside and divided among employees who have been in the 
company's service during the preceding six months. The 
amounts given to each are in proportion to their salaries or 
wages. In 1914, this extra compensation amounted to 20% 
on wages, and the total distribution was nearly $100,000. 
On January 1, 1916, of the whole force, 86% of the force 
received the bonus. When it was first given, only 20% could 
qualify. The percentage has steadily increased. The amount 
this time exceeds $100,000. All employees, from office boys 
to executives, figure in the distribution. 

The company considers that the plan helps to eliminate 
the "rolling stones" and to encourage saving and home build- 
ing. 

The company has been sued by a former employee for a 
bonus claimed to be due him for past services, and it is stated 
that the decision in this case will determine the outcome of 
several similar suits against the company by former em- 
ployees. 

(1919) W. F. R. Murrie, president, November 13: 

"We have not for several years operated under any profit 
sharing or bonus plan whatever. We have found that to oper- 
ate on a straight salary basis is more satisfactory both to the 
employees and to ourselves." 

Hoffman & Billings Manufacturing Company, 
brass and iron works. milwaukee, wis. 

(1916) Some 20 years ago this company shared profits 
with its employees by first setting aside 6% on the capital 
invested. The balance of the profits were divided equally 
between the capital of $200,000 and a payroll of approxi- 
mately the same amount. After two or three years' operation 
the plan was abandoned, for the reason as stated by the com- 
pany as follows: 

"We found that the plan worked all right when there 
were profits to divide but when the firm suffered a loss 
which the payroll did not take part in our men were rather 



PROFIT SHARING REPORT 327 

out of sorts about it, as they figured that there always 
must be a profit, and as we had a year where we did not 
have a profit we found our plan was a good deal of a jug- 
handle affair. In case of good business the men would 
always win but in case of poor business the firm alone 
stood the loss. We had supposed in conducting a profit 
sharing plan that it would make our men take more in- 
terest in the firm's work and business, but we could not 
find that this was the case. They were always willing to 
take the proceeds of a profitable business but they did not 
give us anything in return, and we therefore dropped the 
profit sharing scheme entirely." 

C. Howard Hunt Pen Company. 

CAMDEN, N. J. 

(1916) Several years ago the company made experi- 
ments in profit sharing, one of which was to place at the dis- 
posal of each foreman a block of the company's stock, to be 
paid for from the earnings of the business. The men appar- 
ently took no interest in the plan and it was discontinued. 

It was the company's custom to give each employee who 
had worked a full month one day's vacation with pay, or two 
weeks for a full year of service. The result at first was to 
keep the help regularly at the factory, but they gradually 
tired of it until there were very few benefiting and the plan 
was dropped. 

The Huron Milling Company, 
harbor beach, mich. 1907-1910. 

(1916) The company paid a bonus for length of service 
as follows: For one year's continuous service, 5% of wages; 
two years, 6% ; three years, 7% ; four years, 8% ; five years, 
9%; six years and over, 10%. 

After three successive years' trial the plan was abandoned 
for the following reasons as stated by the company: 

"When we instituted this plan we were having some 
30 to 33% of changes in our working force annually. 
We gave as a reason for the paying of the bonus that, 
owing to the fact that we were chemical manufacturers, it 
was most important that we should have careful men who 
were experienced in their jobs and that we did not like to 



328 THE NATIONAL CIVIC FEDERATION 

see so many changes. We gave the plan a thorough trial 
for three successive years and found that it made no dif- 
ference whatever in the percentage of changes annually. 
These took place almost entirely among the floating labor 
engaged in the outside work, digging sewers, etc., hence 
we found that thev never gave the bonus plan time to reach 
them. It did not seem to appeal to them at all. At the 
end of three years the president of the company, who was 
somewhat suspicious of the popularity of the plan, dis- 
cussed it thoroughly with a number of our older and most 
level-headed employees, and they stated that while the plan 
was satisfactory to them it was not satisfactory to the em- 
ployees as a rule; they looked upon it as a pension, and 
the idea generally expressed was this, that if they were 
earning any more than we had paid them, they preferred to 
get it on the regular pay days rather than once a year; 
also that there was a tendency among them to look for- 
ward to the end of the year, relying upon this bonus, and 
to being more extravagant than they ordinarily would. 
Their statement of the case was too much for us. We im- 
mediately raised wages so that no man should lose any- 
thing by the loss of the bonus, and eliminated the bonus. 
We have had no complaints since. 

"Most of our employees have lived here for a great 
many years. They are largely of English and German 
descent, are very independent, and cannot be classed with 
the ignorant foreign labor which most employers have to 
deal with nowadays. We have had a profit sharing plan 
in our minds ever since we gave up the bonus system but 
have been unable to find any one in like circumstances to 
our own with whom it has been successful. There are 
some manufacturers whose profits are so large either from 
the fact that they own patents and have a monopoly of 
certain products or articles, or from other reasons, that 
they are able to indulge in profit sharing plans and to be 
fairly confident that they can always continue to have 
something to share with their employees. In our business, 
the profits are only normal. Sometimes we have a year 
of big profits, owing to cheap raw materials, but usually 
when this happens the next two years the profits will be so 
small that our average is no more than maintained for the 
three years. 

"We believe in profit sharing and are interested in it, 
but as human nature is constituted in this country today, 
or at least in this town, we would want to be pretty sure 
of our ground before starting any such thing, as if through 
dull business or bad luck, or for other reasons, we were 
unable to divide profits for one year, we feel that it would 
cause a great deal of disappointment and trouble." 



PROFIT SHARING REPORT 329 

This company has always paid bonuses to department 
heads and still continues to do so, finding the results satis- 
factory in every way. 

(1919) George J. Jenks, president, November 14: 
"We understand there is a plan on foot to get a law in 
this state this winter which will permit the sale of preferred 
stock to employees, guaranteeing them a fixed dividend and 
allowing them to participate in any additional earnings up to 
the rate of dividends paid on common stock. This will enable 
employers to permit their employees to participate in profits 
on what seems to be a reasonable and satisfactory basis. 
Also, the suggestion of your chairman that profits to em- 
ployees be not immediately withdrawn from the business but 
left in for a reasonable length of time, seems to overcome 
another of the difficulties of profit sharing." 

The S. M. Jones Company. 

(Formerly Acme Sucker Rod Company.) 
TOLEDO, OHIO. 

(1916) Profit sharing was practiced for several years, 
but it was given up some years ago, according to statement of 
September 7, 1915. 

The Lake Erie Bolt and Nut Company, 
cleveland, ohio. 

(1919) N. J. Clarke, president, November 13: 
"We have not had any plan of this sort in force but the 
old company did install some two years ago a bonus system 
based on length of service, regular attendance, promptness, 
etc., which ran from 5 to 15%, and applied to all factory 
employees. In the main, I would say that it had been a fail- 
ure as it creates more dissatisfaction than satisfaction by its 
operation, but this may be due more to the method of hand- 
ling than to the system itself. As to modifying labor troubles, 
this has been useless as we are now in the midst of the worst 
strike we have ever experienced. 

"The writer is confident that wage-earners are not going 
to be satisfied or contented regardless of any type of profit 



330 THE NATIONAL CIVIC FEDERATION 

sharing, bonus or other systems which may be inaugurated 
but firmly believes that if closer personal relations are estab- 
lished between management and men to the extent that confi- 
dence results, the questions of wages and production can 
readily be settled in a mutually satisfactory manner. In 
other words, personal contact between employer and em- 
ployee will do more toward clearing the situation than all 
the welfare work and profit sharing schemes that can be de- 
vised." 

H. E. Lesan Advertising Agency, Inc. 

NEW YORK CITY. 

(1916) The company put in operation a plan of shar- 
ing the profits with its employees, which it described under 
the head of "Paying Dividends to Workers" as follows: 

"The profit sharing feature of the association is ar- 
ranged on a dividend basis. At the end of each year, every 
employee is given a bonus equal to a certain percentage 
of his or her yearly salary. This percentage is based on 
the profits of the business for the year, and is determined 
by the executive officers of the company. Last year, in 
addition to salaries, $2,000 was distributed among the 
members of the association as a bonus, on the basis of 
6% of the yearly salary of each employee. 

"When the association was organized, a system of mer- 
its and demerits was inaugurated. These merits and de- 
merits are based on a unit of five dollars and are credited 
to or deducted from the amount set aside for the bonus at 
the end of the year. Last year, the merits exceeded the 
demerits, and the bonus was increased 1%%, making it 
7%% of the salaries. One clerk who drew a salary of 
$1,000 a year, received in addition a bonus of $75, while 
stenographers who made $80 a month got a bonus of $72. 
Five per cent of this is paid at Christmas and the balance 
on demand after the first of the year. 

"The merit system affects each worker's pay. A merit 
is awarded to any one who suggests an acceptable 'short 
cut' in business or any system which will save time, labor 
or expense in any branch of the business." 

In May, 1915, the company stated that when the plan 
was in operation it was successful, but that it had been dis- 
continued, owing to a reduction of the force, for various rea- 



PROFIT SHARING REPORT 331 

sons. "We believe that at the time it was installed and oper- 
ated it was successful, but . . . plans of this kind de- 
pend largely upon the amount of business going through the 
office." 

The Locomobile Company of America. 

bridgeport, conn. 1915. 

(1916) In July, 1915, the company announced that it 
would put into effect a profit sharing plan, similar to that of 
the Ford Motor Company, to include all employees from floor 
sweepers to section foremen. There was to be first a wage 
increase of from 8 to 13% and a bonus division every two 
weeks in proportion to the wages of each employee, varying 
in amount according to the number of cars turned out. 

Nearly 3,000 employees were affected, but the company 
states that the plan was in force for a period of only 30 days 
and was abandoned because the employees expressed a pref- 
erence for the eight-hour day or 48-hour week. 

Metropolitan Coal Company, 
boston, mass. 

(1916) The plan put in operation by this company is 
described and its failure explained by the general manager, 
in December, 1909, as follows: 

"I am sorry to say that the profit sharing plan which 
we instituted was a dismal failure. This was due, we are 
convinced, to the false basis on which we tried to found it, 
namely: the payment to the clerks of a percentage of their 
salary, proportioned to the increased number of tons which 
the company sold in any given year. This being with the 
idea that it would cause more strenuous efforts to make 
• sales, and facilitate the business of the company in general, 
through the hope of extra reward. It did not, however, 
work out to that result, principally because the tonnage in 
our business is so seriously affected by the weather, and 
in addition the fact that a large proportion of the tonnage 
is made up of contracts for large amounts of coal, with 
which the clerks have nothing to do and which no efforts 
on their part could affect. We also found a general dis- 
position to regard the bonus at the end of the year as a 
fixed part of the salary, which in many cases was relied 



332 THE NATIONAL CIVIC FEDERATION 

upon to pay bills and meet obligations before it was paid, 
and we found that the amount varied so greatly that it 
caused much disappointment and such bitter feeling that 
after three years we gave up the whole plan. I am, per- 
sonally, and I know some of our directors agree with me, 
of the opinion that the fault was with our particular ap- 
plication of the principle, and I have given considerable 
time and attention to looking into systems of profit sharing, 
with a view to trying again something of the sort." 

Miami Copper Company. 
NEW YORK. 1914-1915. 

(1916) In July, 1914, the company offered to all em- 
ployees the privilege of subscribing to the company's stock at 
a nominal quotation, to an extent optional with the employee, 
but with a prescribed maximum limit proportional to the 
wage or salary earned. The salient features of this plan 
were described by the company as follows : 

The rights and interests of the subscribers as such rest 
with the decision of the board of directors of the company; 

Payments are made in monthly instalments, not ex- 
ceeding 25% of the wage or salary earned; 

Declared dividends are credited as subscription pay- 
ments and interest on deferred payments is charged at the 
rate of 5% per annum; 

When the subscription is fully paid the stock is issued 
to the subscriber, and he therefore obtains the same rights 
of disposal as the ordinary stockholder. As an inducement 
to retain the stock, a bonus of $1 per share per year for a 
period of five years is offered him while he remains in the 
employ of the company. 

Subscriptions are cancelled at the request of the sub- 
scriber, or by subscriber leaving service of the company, 
or whenever subscription payments have been discontinued 
without the consent of the company for a period of three 
months. 

Upon cancellation of the subscription the payments 
made by the subscriber are returned to him with interest at 
5% per annum, but the dividends credited to the subscrip- 
tion are reclaimed. 

The plan has been abandoned for the following reason, 
as stated by an officer of the company in December, 1915: 

"The average number of employees of the company is 
1,000. Of these only about 40 participated and the plan 



PROFIT SHARING REPORT 333 

failed to benefit those men whom it was primarily de- 
signed to benefit, namely, the wage-earners, practically all 
those participating being salaried men. It was, therefore, 
decided not to continue it." 

National Cloak and Suit Company. 
new york city. 

(See also Stock Ownership.) 

(1916) This plan included those employees holding re- 
sponsible positions, whose efforts would materially affect the 
success of the business. A certain amount of profits was set 
aside to be divided among these men. There were three 
classes, as follows: 

Class A. Men who had been with the company a num- 
ber of years and the character of whose work contributed 
directly toward the profits as a whole. 

Class B. Men also with us for a number of years, but 
held less responsible positions and whose efforts would 
contribute in an indirect way toward the profits. 

Class C. Men who had been with us a shorter time and 
who had been recently added to the list of profit sharers. 

The Class A men received the largest percentage and the 
Class C men the smallest percentage in the distribution of 
these profits. The company does not care to state what per- 
centage was set aside, or to give any further details as to the 
actual distribution. 

At the end of the fiscal year June 30, 1914, the company 
abandoned the above plan and substituted a stock subscription 
plan, a description of which will be found among the plans 
now in force. 

Northwestern General Trading Company. 

spokane, wash. 

(1916) This company reports that its plan was discon- 
tinued in 1915. 

i 

i 

An Optical Company. 

(Name and place withheld by request of company.) 

(1916) In 1905 an optical company in a large indus- 
trial city made a distribution of the profits of the business to 



334 THE NATIONAL CIVIC FEDERATION 

all salesmen, heads of departments and workmen who had 
been longest in its employ. The provisions were that: 

The capital actually invested should first drav/ 7% inter- 
est, the balance of profits then remaining to be divided in such 
proportion as the capital invested in the business bore to the 
salaries and wages of those participating. Seven per cent 
interest per annum was paid on any profits or funds not 
exceeding $1,000 left with the company. 

Other employees of the company might participate in the 
profits upon invitation, but the computation of their share was 
figured only on the wages earned after date of notification. 
Any employee not under contract who withdrew from the 
company's employ, and gave three months' notice, might still 
participate in the profits while employed. But an employee 
under contract leaving without the company's consent would 
not be entitled to any share of the profits for that year. The 
profit share of a discharged employee was based on the salary 
earned while in the company's employ. March 28, 1916, the 
company reported its abandonment for certain reasons. 

Page Belting Company, 
concord, n. h. 1887. 

(1916) This plan provided that if a profit above 10% 
net were earned on the capital stock, the excess up to $1,200 
would be divided among the wage-earners. The bonus was 
apportioned according to merit, valuable suggestions and 
economies, and continuous satisfactory service for a year. 
The company at first considered the plan a success, but it is 
not now in operation. The reasons for its discontinuance 
cannot be ascertained. 

Peace Dale Manufacturing Company, 
manufacturers of woolen fabrics. peace dale, r. i. 

(1916) In 1878 the company adopted the plan of pay- 
ing the employees a certain percentage on their respective 
earnings, according to length of service. The plan, which 
continued in effect for a number of years, was described and 
commented upon by the president of the company in Decem- 
ber, 1909, as follows: 



PROFIT SHARING REPORT 335 

"We found our plan here was open to the objection 
that those who were honestly careful and solicitous for the 
welfare of the company, and who tried to make the indi- 
vidual small savings of waste and wear and tear possible 
to every workman, were put upon a level with those who 
paid no attention to their own part in the scheme. When 
at the end of the year the amount was declared and set 
aside, the conscientious fared no better than those who had 
not been so. The result was that those who at first tried 
to do their part faithfully were affected by the evidence 
they had that they would fare just as well if they made no 
more effort than those about them whom they saw making 
none. It was almost impossible for us to figure out a plan 
by which the faithful could be differentiated from the un- 
faithful. That is where the trouble comes in. The plan, 
like the sun, shines upon the just and the unjust. 

"Our plan was exceedingly simple. The dividend de- 
clared was entirely optional with the directors, and was 
stated to the recipients to be a freewill offering on the 
part of the company, It was not guaranteed to be con- 
tinued. It was not complicated because it was based on 
the percentage of the earnings of each one who had been a 
certain length of time in the employ of the company, seven 
months in our case. 

"In spite of this plan, which was subject to the fluctua- 
tions of the business, a strike developed of such pernicious 
character as to be very difficult to reach. It was among the 
weavers, who refused to try a kind of work which they had 
not done before, although it was figured out to the satis- 
faction of all the experts that they could make more money 
on the new work than on the old. Being a new departure, 
they would not try it, and rather than try it they struck. 
They did not complain of having had too small wages be- 
fore. They only complained of being asked to do some- 
thing they were not asked to do before, which seems so 
irrational a ground as to be hardly believable, and yet I 
am sure there was no other ground. 

"My objection to the plan is then fundamental. At 
present we are in a very great quandary to know what to 
do. The strike has been long since cured, and the men 
were proved to be in the wrong. They came back without 
obtaining any of the points they sought to establish, among 
others a closed shop, but it was a very trying affair." 

Pillsbury- Washburn Company. 
flour millers. minneapolis, minn. 

(1916) In 1882 the company adopted a plan of paying 
out of its profits a bonus to its responsible employees in the 



33d the national civic federation 

offices and mills, including its skilled workmen. The plan 
continued in effect for a number of years, during several of 

which the company paid a bonus. But its successor, the pres- 
ent Pillsbury Flour Mills Company, states that the plan was 
abandoned because it did not work out successfully. 

(1919) Albert C. Loring, president, Pillsbury Flour 
Mills Company, November 23: 

"The Pillsbury Flour Mills Company have no profit shar- 
ing plan, but, as undoubtedly all other progressive manufac- 
turers are, they are materially interested in the subject and 
are watching the developments that are taking place in the 
country. 

"The Pillsbury-Washburn Flour Mills Company, Ltd., 
predecessors of the Pillsbury Flour Mills Company, at one 
time had a profit sharing plan, which proved to be entirely 
unsatisfactory. In most instances the men had spent their 
money in anticipation of receiving the dividend; and when 
it failed to come they were antagonistic to the management 
and severely criticised it. Disorganization throughout the 
plant was very noticeable. The writer at that time was con- 
nected with an organization competing with the Pillsbury - 
V\ ashbum Company, and being outside was in a position to 
hear the criticisms and remarks of the men in the employ of 
that company. He was thus able to judge how demoralizing 
the situation was, and to what extent it injured the efficiency 
of the men. Ultimately, the company broke down and went 
into the hands of receivers, not. however, due to the lack of 
loyalty on the part of its men, but the profit sharing basis did 
not tend to make the situation any brighter. 

"It is a very difficult problem, and the study of it by the 
many interested undoubtedly will ultimately develop some 
method that will have the maximum of good points, while it 
is to be doubted that they will be free from some ground for 
criticism.*' 

Thomas G. Plant Company. 

SHOE MANUFACTURERS. BOSTON, MASS. 1905. 

(1916) A profit sharing dividend was paid quarterly 
to employees who had been with the company not less than 



PROFIT SHARING REPORT 337 

three months and who met the requirements of a system of 
ratings in respect to attendance, cleanliness, deportment, in- 
dustry and quality of work. 

For the purposes of this rating system, the employees 
were divided into four classes. The dividend to Class A 
was equivalent to one week's pay; to Class B, four days' pay; 
to Class C, two days' pay, while those in Class D received no 
dividend. The rating was by points which were placed to the 
credit of employees as follows: 60 points for first class work; 
45 points for the best record of lates and stayouts ; 30 points 
for good workers and 20 points for cleanliness and deport- 
ment. The foremen submitted weekly reports of the mark- 
ings and a committee appointed by the company passed on 
the records and classified the employees accordingly. The 
company also made the offer that if any employee would 
leave 10% of his wages on deposit, the amount to his credit 
would be doubled and the total might then be withdrawn at 
the employee's option upon one week's notice. 

Mr. Plant severed his connection with the company upon 
its transfer to other ownership, and the profit sharing was 
discontinued at the end of 1910. On Christmas of that year 
employees who had worked in the factory for five years or 
more received from Mr. Plant a gift of not exceeding $10 for 
each year of their service. 

Ringwalt Linoleum Works. 
new brunswick, n. j. 1914. 

(1916) The company reports (March 28, 1916) that 
its plan, which was started largely in the nature of an experi- 
ment and which applied principally to heads of departments, 
was discontinued recently as the results did not seem to war- 
rant its retention. 

Rogers Peet Company, 
clothiers. new york city. 1886. . 

(1916) A fixed proportion of the profits was divided 
pro rata among the employees, not including heads of depart- 
ments. The distribution ranged from 2^ to 5% on the 
annual salaries or wages. According to N. P. Gilman in his 



338 THE NATIONAL CIVIC FEDERATION 

"Profit Sharing Between Employer and Employee," a mem- 
ber of the firm stated in 1887 that under this plan the men 
were working with more zeal and intelligence than they had 
ever shown before, doing the same work in 9% hours that 
they had previously accomplished in 10. 

After four years' trial, the plan was abandoned on ac- 
count of a strike participated in by a considerable proportion 
of the profit sharers. The vice-president of the company 
states that it has been the general impression of the principal 
officials since the discontinuance of profit sharing that it was 
"a complete failure in its primary object — to wit, the develop- 
ment of a more intense spirit of loyalty, for as above stated, 
the scheme expired in a strike." 

St. Louis Shovel Company, 
st. louis, mo. 

(1916) A profit sharing plan was in operation a num- 
ber of years ago at this plant, which is owned by the Ames 
Shovel and Tool Company. The plan was abandoned on 
account of a strike, which the company states was not for 
higher wages, but for unionizing of the plant. The shops 
were closed for four months and profit sharing was discon- 
tinued. 

Saugerties Manufacturing Company, 
manufacturers of blank books. saugerties, n. y. 1901. 

(1916) For a number of years a profit sharing dividend 
of 5% on wages was distributed among the employees, but 
an officer of the company states that it did not accomplish the 
intended purpose of encouraging co-operation. It was found 
difficult to discriminate between those who were entitled to the 
extra payments and those who were not, and it was felt that 
a distribution only to those entitled to it would engender ill 
feeling and discontent. The scheme was abandoned in 1911. 

The Spencer Wire Company. 
iron and steel wire. worcester, mass. 1915. 

(1916) This plan is identical with that of the Farr 
Alpaca Company, excepting the rate of dividends paid, which 



PROFIT SHARING REPORT 339 

at present is 6%. All of the company's 750 employees are 
affected. In its announcement to the employees of the adop- 
tion of the plan, the company states that it is intended to 
encourage increased production and avoid frequent changes 
in the force; and that it is hoped the profits will be increased 
by the employees taking a personal interest in the continued 
success of the business. 

(1919) H. W. Goddard, president, September 4: 

"We have abandoned the plan entirely. ... In re- 
gard to the feeling, it may have been appreciated by some, 
but, if so, they did not say so. The loud mouthed ones had 
no end of objections and expressed them frequently. We did 
not find that it eliminated or modified labor troubles. . . . 
None of our directors or heads regarded the plan as a success. 
It failed because the men did not regard it as profit sharing 
by any means, but frequently said that it belonged to them. 
They said that the company would not give them anything 
unless they could well afford to, and if they could afford it 
it belonged to them anyway, and they wanted it in their pay 
envelope every week. Our plan was simply to pay labor 
the same percentage of dividend on their wages that the stock- 
holders received on their shares of stock. There were no 
strings to it. At the time we abandoned the plan we were 
paying the stockholders 10%. There was so much talk and 
criticism that we notified the employees that this 10% profit 
sharing would be abandoned forthwith and in its place we 
would give them a straight advance of 10% in wages, payable 
each week. This was done notwithstanding that we had made 
a general advance only a very few weeks before and were 
making regular advances to conform with the labor market. 

"We have no desire to adopt the plan again. It may be 
that we took a bad time to adopt it, just previous to the war, 
when labor conditions were abnormal, but the result we hoped 
and tried to obtain was the elimination of labor turnover, 
to secure loyalty and the elimination of carelessness, accidents 
and waste of material by making the employees participate 
in a way in the profits. We did not find any of these results, 
but a man would leave us for 25 cents a day more pay, 
although at the end of three months he might have a wage 
dividend coming to him of $25, which, as you can see, would 
be 33% more than he received by making the change. The 



340 THE NATIONAL CIVIC FEDERATION 

fact was, however, that he could see the $1.50 more in his 
envelope every week, and he did not want to wait three months 
for a larger sum. We tried to explain to them. Some could 
see it, but others said, 'If it is coming to us, we want it in our 
envelopes every week.' 

"Our accidents increased 25%. This mav have been 
due to the necessity of hiring so many new employees who 
were careless. 

"Elimination of waste. We did not find this result, but 
on the contrary an increase of waste because the men were so 
anxious to make big money that they would not take proper 
pains with their work. This was in order to secure as much 
money as possible from their job rates. These, of course, 
govern production, and they would throw away or get out of 
sight even good material if there was a little bother con- 
nected with it or if it took a little time to rectify." 

Springfield Foundry Company, 
springfield, mass. 

(1916) About 20 years ago this company maintained a 
system of profit sharing, which was discontinued for the fol- 
lowing reasons, as stated by the president of the company: 

"We abandoned profit sharing because it did not seem 
to create the spirit of harmony between the workmen and 
the officers of the company that we anticipated it would; 
and the workmen seemed to get the idea that they should 
be consulted on matters of management of the company's 
affairs, rather than being willing to confine themselves to 
shop conditions and shop details." 

Union Mining Company, 
mount savage, md. 1886. 

(1916) A dividend on wages, equivalent to 10% of the 
dividends declared on the company's stock, was paid to all 
employees who had been with the company six months or 
longer. Under this plan, the 300 employees received two 
dividends, but the profit sharing was then discontinued on 
account of a strike. The president of the company, as quoted 
by N. P. Gilman in his "Profit Sharing Between Employer 



PROFIT SHARING REPORT 341 

and Employee," made the statement with reference to this 
experience: "I do not believe that interest or painstaking in 
their work has quickened among 5% of the force." The 
men apparently considered "only the money advantage, with- 
out taking in the idea that by their own efforts they could 
increase it." 

On the eve of the strike in 1887, according to Dr. Gilman, 
"the president called the men together; corrected a misappre- 
hension on their part that certain new works, costing some 
$40,000, had been built out of profits (no provision had been 
made for calling in an accountant) ; pointed out the excellent 
prospect for a dividend, which they would forfeit by striking ; 
declared that a strike would surely put an end to the profit 
sharing plan; and appealed to the more independent of the 
men to organize in support of the company. He offered an 
increase of 5% on wages, with the conditional promise of as 
much more at the end of twelve months. But the men struck 
(only one standing by the company), and afterward refused 
offers of arbitration under three different forms. The strike 
lasted ten days and then began to break; but there were 
troubles again in May and September, which further crippled 
the operations of the company, and spoiled the best business 
season that had ever offered itself; the employees themselves 
lost in wages and dividends between $6,000 and $8,000 in 
ten months. The profit sharing plan was given up at the first 
meeting of the directors after the strike." 

The Ward Baking Company. 
new york city. 1913. 

(1919) This company discontinued its plan several 
years ago, finding it to be unsatisfactory. 

Washington Railway and Electric Company, 
washington, d. c. 1912. 

(1916) It was found in 1911 that 26% of the gross 
earnings of the company had been required to pay trainmen's 
wages and damage claims. Every year since that time the 
company has divided among the conductors, motormen, depot 
clerks and starters the difference between the amount of the 



342 THE NATIONAL CIVIC FEDERATION 

wages and damage claims and the fixed sum of 26% of the 
earnings. 

The distribution is based on the length of service from 
one to twelve months, all men in the service one year or longer 
receiving the same amount. 

The company started this scheme in order to reduce the 
accidents and induce more careful handling of fares, but 
according to their 1915 report the men failed to grasp the 
situation. Damage claims and accidents increased so that the 
share of profits for men in the service a full year or more was 
only $21.17, as compared with $42.53 for 1913. In part 
explanation the president of the company cited three accident 
settlements involving a total expense of $22,563.95, which 
alone diminished the profit sharing check by $30.76. This 
official concluded that "general co-operation has been lack- 
ing," and stated that a plan had been adopted for giving 
special recognition to the faithful employees, "both by mark- 
ing them for preferment and increasing their share in the 
profits." There are about 800 employees, and under this new 
marking system the distribution in January, 1916, to full year 
men having no demerits was $23.17. The total distribution 
was in excess of $15,000. The company reports in February, 
1916: ''The plan has worked satisfactorily, both to the men 
and to the company." 

(Since this analysis was prepared the plan has been aban- 
doned as the result of a strike occurring on the lines of this 
company early in March, 1916. In the settlement of the strike 
the employees have secured a reduction in working hours, in- 
creases in wages, a provision for arbitration of grievances 
and certain other concessions. During the strike the com- 
pany posted a notice to the effect that all men who remained 
at their posts would receive on April 5 a cash bonus of $25 
"as a preliminary payment from the 1916 profit sharing 
fund." In consequence of the new concessions, however, the 
company has discontinued all benefit, relief and profit shar- 
ing features.) 

Wayne Cut Glass Company, 
towanda, pa. 1914. 

(1916) The directors voted to set aside a certain per- 
centage of the net earnings for distribution among employees 



PROFIT SHARING REPORT 343 

who had worked faithfully for the company at least one year. 
Soon after the passage of this resolution there was a material 
change in business conditions, which the company ascribes 
to tariff legislation, and instead of a surplus to distribute the 
year's operations showed a deficit. The management states 
that the workingmen were not willing to take this fact into 
consideration and share the losses by accepting a reduction in 
wages, and that all consideration of profit sharing has there- 
fore been abandoned for the present. When conditions per- 
mit, the company expects to take it up again. 

Williams Brothers Company, 
lumber dealers and manufacturers of last blocks. 

cadillac, mich. 1914-1915. 

(1916) On January 1, 1914, the company inaugurated 
a plan under which each employee was to be paid a bonus of 
3% of his wages earned through the preceding year. The 
plan was abandoned after one year on account of business 
depression. 

The company states that the plan did not work out to any 
great advantage to the company, for the men seemed to accept 
it as a matter of course, and several who had been with the 
company from 10 to 20 years left for other places, going 
on farms, et cetera. The company also states that it was its 
intention to increase the percentage each year until it equaled 
6 or 8% of the net payroll. 

A Window Glass Manufacturing Company. 

J. R. Johnston, secretary -treasurer, National Association 
of Window Glass Manufacturers, Pittsburgh, Pa.: 

"While it has no bearing on the present plan, the writer 
many years ago adopted a profit sharing plan, which worked 
splendidly as long as there were profits to divide, but when 
a long period of depression came and profits disappeared, 
the employees in no sense desired to participate in a loss shar- 
ing plan. If the proposition is to regulate wages according to 
earnings, it should be a give-and-take proposition, and if em- 
ployees' incomes were regulated by profits and losses auto- 
matically it should be applied both ways; in that way it would 



344 THE NATIONAL CIVIC FEDERATION 

be absolutely fair to both employers and employees and 
would not require dickering or arbitrary methods to arrive 
at exactly the right status. I mention this because nearly 
every person talks profit sharing but makes no mention of the 
other features of the arrangement." 

Wright & Potter Printing Company, 
boston, mass. 

(1916) In a letter of March 27, 1916, the president 
states: "An ancient attempt of this company at profit sharing 
was made but after its failure nothing more was done. Our 
company has to-day no interest whatever in the matter and 
owing to our being governed so to speak by the typographical 
union we feel that any endeavor to establish a profit sharing 
system would be useless." 



PROFIT SHARING REPORT 345 



PROPOSED PLANS. 

Plans in the making or at the stage of initiation possess 
the interest of the reader's appraisal. They may indicate 
either the ingenuity of a manager having independent initia- 
tive or the reasoned conclusions of a student of the subject. 
In either case they are worthy of consideration by followers 
in the same path. No matter the failures, tentative effort in 
the domain of profit sharing is constant. 

Broderick & Bascom Rope Company, 
st. louis, mo. 

(1919) Joseph D. Bascom, secretary and treasurer, 
November 24: 

"Our firm has not put any plan into operation, although 
we have had it under consideration for some time. Average 
number of employees, 350 to 400. I understand the men 
are only partially pleased with the proposed plan. They 
prefer to get increased wages, for they struck for higher 
wages and shorter time, without giving us an opportunity to 
discuss the matter with them, and within a few months after 
the publication of the plan. 

'Whatever profit sharing plan we adopt will probably be 
on the basis of time of service. The longer a man has been 
in our employ the greater the percentage he will get of the 
profits, there being of course a limit to the employees' time 
of service; that is to say, a man 10 or 15 years in our employ 
would receive a certain percentage; one 15 years or over a 
greater percentage. We have men in our employ 40 years, 
but it is doubtful whether we would increase their percentage 
much over one who has been in our employ 15 or 20 years. 
Our plan will not be limited to the heads of departments, but 
will include the rank and file. In fact the per cent of profit 
would be greater to the actual producers and less to the heads 
of departments because of the higher wages received by the 
latter." 



346 THE NATIONAL CIVIC FEDERATION 

John A. Casey Company. 

NEW YORK. 

(1919) Frank S. Gannon, president, made this an- 
nouncement, December 31: 

"For two years beginning January 1, 1920, the follow- 
ing plan of distribution of surplus profits is to be adopted: 
1. Set aside $25,000 to cover: (a) A sinking fund (to pay 
off mortgage), $7,500; (b) A reserve fund (to cover de- 
preciation and unforeseen losses, $5,500; (c) A 6% divi- 
dend, $12,000. 2. The secretary and treasurer shall be 
paid 10% of the increase in the net earnings over those 
of the preceding year. 3. After deducting the amounts 
provided for herein above, divide 30% of the surplus 
among all employees who have worked continuously for 
the company during the previous six months on the basis 
of their individual earnings, guaranteeing them a bonus 
of 10% of their wages for the six months previous to 
July 1 and December 31 of each year, which 10% is to be 
paid whether or not there is a surplus. This bonus shall 
be distributed 10% on July 1 and 10% on December 24 
of each year. The division of surplus profits shall be made 
on February 1 and August 1 of each year, at which time 
will be deducted the 10% which shall already have been 
paid to the employees on the preceding July 1 and De- 
cember 24." 

Eastern Shore of Virginia Produce Exchange. 

onley, VA. 

(1919) A. J. McMath, secretary-treasurer, Novem- 
ber 11: 

"Our exchange being a farmers' co-operative organiza- 
tion, which handles the products of about 4,500 farmers in 
Accomac and Northampton counties, known as the Eastern 
Shore of Virginia, we have for several years, in accordance 
with our by-laws, been refunding to shippers one-half of the 
actual profits. We feel, however, that our policy will have 
to be enlarged so as to take in the officers and employees of 
the exchange, and to this end we will give the matter serious 
consideration during the next few months. 



T? 



PROFIT SHARING REPORT 347 

The H. A. Marr Grocery Company. 

DENVER, COLO. 

In a communication of December 3 this company de- 
scribed the profit sharing plan which it contemplated adopting 
January 1, 1920. This makes it an object to employees to 
reinvest in the company the profits shared with them. The 
amount of profits and volume of business of the profit sharing 
year are to be made known to all the employees, whose num- 
ber is approximately 70. Necessarily, in a business of this 
kind, no general flat bonus can be contemplated, but the pay- 
ments are varied according to position, responsibility and 
possibilities of success in management. The assistant general 
manager, who is also sales manager, is to receive an amount 
equal to 10% of the increased net profits of the business as 
a whole as compared to the previous year. The three man- 
agers of merchandising departments are to receive an amount 
equal to 10% of the increased net profits of their department. 
Carefully worked out proportions, based on savings in opera- 
tion of departments, are to be given the warehouse and ship- 
ping superintendents, the office manager and the manager of 
credits, and all the sales force is to be paid on a salary and 
bonus basis. This plan takes the place of a previous profit 
sharing method, which proved not entirely satisfactory. By 
it many of the employees owned common stock. 

New England Hardware Dealers' Association. 

(1920) At the annual convention of this association, 
held February 26, in Boston, as announced in the press, 60% 
of the delegates voted in favor of distributing stock in their 
respective concerns to employees "and so make workers profit 
sharers as the best means of solving the wage problem." 
Several delegates speaking in favor of the principle described 
their methods of giving bonuses in proportion to sales, or of 
distributing shares according to efficiency and time of service. 

Robert Reis & Co. 

In January, 1920, this firm announced for self and sub- 
sidiary companies a plan in which employees in service since 
January 1, 1919, may voluntarily participate. The maxi- 
mum subscription is 14 shares of preferred stock with one 



348 THE NATIONAL CIVIC FEDERATION 

share of common for each two of preferred. Subscriptions 
for preferred stock, par value $100, are to be accepted at 
$95; and for common stock, $20, which is less than the mar- 
ket price. Instalments are $1 per share per month for pre- 
ferred stock, and 25 cents for common. Bonuses on the stock 
are also to be paid. Provision is made for interest on with- 
drawals. An executive council to represent the employees is 
to be composed of mill superintendents, foremen and repre- 
sentatives of selling and other groups. 

0. W. Richardson & Co. 

> 

CHICAGO. 

(1919) R. T. Richardson, vice-president and secretary, 
November 11: 

"We have not used any profit sharing plan to date, but 
have developed a plan which we expect to start about Jan- 
uary 1 : 

Applies to all employees of a group, to be called 
"group 0," composed of all employees except executives, 
directors, sub-executives, and salesmen. All group em- 
ployees will share pro rata each month in the distribution 
of group funds created in the following manner: The 
group fund is lo be created each month by receiving 
credit from the company for 50% of the saving in op- 
erating costs; this operating cost to include the payroll of 
all members of group plus the cost of controllable ex- 
penses such as stationery, supplies, lights, etc. This cost 
each month is to be figured in percentage to the net sales 
and compared with the average similar percentage for the 
same month for three previous years. 

The payroll figures to be considered for the last three 
years as well as the current year, are to cover only the 
classes of workers now composing group 0. The par- 
ticipants will share according to the percentage of the 
salary paid to them during the month to the total payroll 
of group for the month. 

The distribution of the funds to be made monthly, be- 
tween the 25th and 30th of each month for the saving of 
the previous month. The sales figure on which the per- 
centage is to be based is the combined wholesale and retail 
sales less all returned items or credits and less any returns 
to factories or other purchase accounts which may be in- 
cluded in sales. 

The factors controlled by each individual employee 
affecting this fund are: Steadiness of employment re- 



PROFIT SHARING REPORT 349 

during labor turnover, uninterrupted attendance, prompt- 
ness in starting work, application to duties throughout the 
day, more efficient methods of working in every depart- 
ment, suggestions for more efficient handling, economy of 
time, supplies, light, etc., and by each employee having an 
interest in the resuks as a partner in the business. 

It is estimated that it is easily possible for employees 
to increase their salary by bonuses equivalent to at least 
10% of their salaries. 

San Diego Savings Bank. 
san diego, cal. 

(1920) J. W. Sefton, Jr., vice-president, January 5: 

"January 1, the San Diego Savings Bank adopted a profit 
sharing plan. An outline of the principal features follows: 
The proposed plan aims at the creation of a surplus account 
to be known as employees' surplus, against which certificates 
of participation bearing 6% interest will be issued to em- 
ployees eligible to participate in the earnings of the bank. 
These certificates shall be non-transferable and non-negotiable 
but may be retired by the bank at the option of the holder at 
any time after three years from the date of issue at par and 
interest, upon the holder giving the bank 60 days' notice of 
his intention to present the certificate for retirement, or in 
less than three years at the option of the bank should the 
holder for any reason leave the service of the bank, or upon 
demand in case of the death of the holder of any certifi- 
caie. . . . 

"In ascertaining each employee's investment there shall 
be added to the total salary paid him by the bank during the 
period to be figured, 10% for each year of continuous service 
after the first year until a maximum of 50% has been reached^ 
after which there shall be no further increase. 

"Six per cent shall be considered a fair return on the 
stockholder's investment. Ten per cent of the remaining 
earnings shall be credited to the employee's surplus, and cer- 
tificates of participation in the same amount shall be issued 
to all eligible employees in proportion to their participa- 
tion. 

'The employees may appoint from among themselves a 
committee of three whose duty it shall be at the close of each 
period to verify the bank's statement of earnings for that 



350 THE NATIONAL CIVIC FEDERATION 

period and report their findings to the employees. The em- 
ployees' committee may take up with the officers any items in 
the bank's statement which they do not understand or upon 
which they may wish to raise a question." 

Winship, Boit & Co. 

HARVARD KNITTING MILLS. WAKEFIELD, MASS. 

This firm, in January, 1920, established profit sharing 
and co-partnership, 800 employees to be included in the plan. 
Half the net profits of each year's business will go to the 
"employee partners," 50% of which is to be paid in cash 
and 50% in the working capital, which is to draw 6% inter- 
est. The dividends to employees are proportioned to length 
of service. For 1919, one year's standing qualifies for 20% 
on wages, and for each year's further service an additional 
1% is given. Forms of mutual aid and improved working 
conditions are provided for. Dependent widows of employees 
and children under 14 years are provided for from the gen- 
eral expenses of the company. An employee of five or more 
years' standing, on reaching the age of 60, will have the right 
to withdraw each year 50% of the amount credited to him. 
The employees may employ their own accountant to ascertain 
net profits. Proprietors retain right of full control and of 
power to discharge, enlarge or decrease the force. 

If at any time the interests of the employees exceed that 
of the proprietors, either side may initiate steps to form a 
corporation or association to run the business. Employees 
share in losses as well as in profits. The firm reserves the 
right to abrogate the agreement in two years, if it appears to 
have failed in its purpose, which as outlined in the pre- 
amble is: 

"To promote more cordial and profitable relations be- 
tween the proprietors and their employees; to increase inter- 
est in the welfare of the business; to induce greater care and 
economy in use of materials; to awaken pride in the manu- 
facture of the best possible product, and to encourage econ- 
omy and thrift among the employees, that they may be better 
fitted for the discharge of all duties of civic and private life, 
and especially for the better education of their children and 
elevation of the standard of civilization.^ 



PROFIT SHARING REPORT 351 



PRACTICE AND THEORY. 

In the Motor Trades. 

(E. S. Fuljambe, New York "Times," January 4, 1920.) 

"Almost all of the known methods of profit sharing, 
bonuses, premiums for rapid production, co-partnership 
plans, employes' representation, home building plans, etc., 
are in successful operation among the manufacturers of cars, 
trucks and parts. 

'The bonus systems in most cases include continuous 
attendance and length of service as requisites, six months' 
continuous service usually being the minimum. Bonuses are 
then paid at the end of nine months and at the end of twelve 
months. Such bonuses were established in certain plants as 
a war measure but have been continued. 

"The anniversary check plan, which is very successfully 
used by one large manufacturer, allows each employee to 
receive an anniversary check on each anniversary of his em- 
ployment, based on his total earnings for the previous year. 
On the first and up to and inclusive of the fourth anniversary 
the workers receive 5% and on the fifth and each succeeding 
anniversary 10% of earnings during the year in addition to 
their salary. 

"Co-partnership arrangements are also quite common, but 
continuous service is necessary to entitle the employees to 
purchase stock of the company. Stock to the amount of 20% 
of annual earnings may be purchased by any employee who 
has been with the company three months or more. Stock 
applications must be accompanied by an initial payment of 
10% ; 50% of the cost of the stock is taken care of by the 
employer, provided the employee remains in service and in 
good standing for four years. The other 40% is paid by 
the employee in instalments during the four years. 

"In one plant all factory employees who have been in 
service for two years or more are entitled to annual vacations 
of one week with full pay. Another maker who manufactures 



352 THE NATIONAL CIVIC FEDERATION 

bodies allows a certain direct labor cost for each particular 
type of body, and if the body is built for less the difference 
is divided with the men. 

"A liberal profit sharing plan is in operation by another 
maker who divides with the employees 25% of the profits 
pro rata in proportion to the amount of money paid to each 
employee that remains in the employ of the company through- 
out the year. By this means, any employee has it within his 
power to make his dividend large or small in proportion to 
the quality and amount of the work he does. 

"In other factories a 10% bonus is added to the pay 
envelopes of the men each week provided that they have not 
been late or absent. This maker reports a very greatly de- 
creased turnover in help as a result. A $1,000 paid-up life 
insurance policy is provided for each employee free of cost 
and increased to $1,500 at the end of the first year's service. 

"Another successful method of profit sharing is dividing 
with the men a definite percentage of the profits as wages. 
This dividend, however, which runs from 6 to 17%, is paid 
every two weeks in an envelope marked 'employees' dividend/ 
This represents the workers' share in the profits resulting from 
increased activity and greater efficiency. In one instance, the 
result of this system was an actual shortening of hours from 
53 to 50 per week; at the same time production was in- 
creased 8%. 

"Still another method is the setting aside of a definite 
percentage of the earnings of the company to be divided 
among the employees in the form of wages. This method 
with one firm has resulted in accomplishing the same amount 
of work with fewer employees, which, of course, means that 
each employee receives a larger wage. It is to the workers* 
interest to produce the largest amount possible with the small- 
est number of men. A notable example of the results of this 
system was an increase in wages of 50%." 

In the Building Trades. 

0. W. Norcross, Worcester, Mass., an octogenarian con- 
tractor and builder, had views founded on unusual experi- 
ences. He recently wrote to Mr. Perkins as follows: 

"I think you have suggested the proper solution of this 
problem, the most important one that confronts the world 



PROFIT SHARING REPORT 353 

to-day. One's opinion about anything depends on his knowl- 
edge and experience of the subject, and few men have had 
the experience that I have had in handling men. As a gen- 
eral contractor I have dealt with all kinds and conditions of 
men for a period now extending over 50 years. I presume 
that no man in the country has had so much trouble and em- 
barrassment as I have had with strikes, commencing with the 
Marshall Field Building in Chicago, which I was building 
at the time of the Haymarket riots. 

"As general contractor, at one time we did within the 
limits of our organization all the different trades, such as 
granite cutting, marble work, mason work, carpentry, heating, 
plumbing, direct with the men, that is, we did not let these 
out by sub-contracts. I therefore have been brought in close 
connection with all kinds and conditions of men, and I some- 
times have confessed to an undercurrent of sympathy with 
some strikes, but most of them are wrongly conducted, and 
we could have arrived at the present conditions of greater 
reward for labor without the strikes. 

"The drinking habit has been the great curse that has 
underlaid all of our labor troubles. It was a provable fact 
that in a payroll of marked bills at McKeesport some 15 or 20 
years ago, of $10,000 of money paid out as a payroll Satur- 
day night, $7,500 of it was returned through the saloons. 
I have had much to do with individual men and have been 
so popular even with unions that at one time a whole granite 
cutters' union of 200 men in Milford threw over their union 
because they thought I was right. 

"Many a man who could not afford it has increased his 
living expenses without at all increasing his happiness. 

"In my opportunity to be acquainted with many different 
trades, I have studied the individual man. I believe that 
to-day our so-called labor organizations are controlled by a 
minority, that minority being a radical minority, which as a 
general thing would as soon fight as eat, and includes some 
able men and good talkers, but not great thinkers. The very 
large majority of men simply want to be treated fairly and 
have a fair share of the great benefits which our present 
civilization confers on everybody in America. 

"I would say that I consider it would be best to have eight 
hours as a basic measure of a day's work, something to add 



354 THE NATIONAL CIVIC FEDERATION 

to or something to take from. The 24 hours is divisible by 
eight, and if it is necessary to work shifts, this is more easily 
managed with eight hours than with any other number. I 
consider it important to have a measure of what might be 
called a day's work, that any employer of labor can call on 
those he employs and who are associated with him, to render 
to the world for what they get out of the world at the present 
time. There are many trades in which this might be varied, 
for instance I think it possible a miner, who works under- 
ground, lies possibly on his back, should not work perhaps 
eight hours a day. Of course, those people who work in 
tunnels and under air pressure, commonly known as sand 
hogs, cannot possibly work more than from two to four hours 
per day, and this difference may be greater or less in other 
trades, but eight hours is a fair day's work. 

'The payment should always be by the hour. It was 
always my custom in the shops where it could be arranged, if 
business got dull, instead of discharging the men, to lessen 
the hours all around." 

Some Problems Involved. 

W. 0. Lichtner, the Thompson & Lichtner Company, con- 
sulting engineers, Boston, Mass.: 

'There is no doubt that the plan as worked out by Mr. 
Perkins, if under his personal supervision and with his per- 
sonality as a factor, might bring excellent results, but it seems 
to me that it is only in this way that it would prove workable, 
the reasons being: 

''1. The employees naturally distrust the correctness of 
the financial statement. The details of the statement, in 
which they are asked to put their faith, involve an analysis 
of costs including: Purchasing of materials, sales expense, 
overhead expense, machinery burden, direct expense of labor, 
etc. How many workmen know anything of costs and ac- 
counting and can form any approximate idea as to whether 
or not they are correct? Will a financial statement show 
this? The answer is most certainly, No; for any one who has 
any knowledge of costs and accounting is well aware that 
accounts can be juggled to show almost anything. If you 
don't believe it, refer to any. of the accountants who are 
checking up concerns on their income tax returns. Now, 



PROFIT SHARING REPORT 355 

since accounts can be made to prove anything and the work- 
men know this, how much faith would you expect them to 
have in a proposition where the accounts are necessarily kept 
by the company and may be juggled to their hearts' content? 
The answer in many cases has been none. 

"2. The plan is based on the business as a whole, which 
involves many variables over which the employees have no 
control. What effect can the interest or effort of the em- 
ployees have on such strictly management problems as the 
following? Investment in plant, investment in machines, ad- 
vertising, buying of materials, sales expense, wages of execu- 
tives and directors, losses on bad accounts, etc. Although 
the men exert all the effort possible, there may be no profits, 
because any or all of these things have been poorly executed. 
When this happens the men rightly feel that they have had 
no proper return for their increased effort. 

"3. The plan forces the employee to invest money that he 
earned by his extra effort, and does not consult him as to 
whether he would not prefer being paid individually the full 
return for his increase in effort. Take yourself, if you were 
an A-l mechanic, would you be willing to be a party to an 
undertaking whereby your individual efforts go into a general 
big pot, and at least part of your extra endeavors are used 
to counteract the shortcomings of some inefficient ones in your 
organization? 

"4. The plan withholds from the employee money which 
he should have had from week to week. The 'fairer remu- 
neration' of which Mr. Perkins speaks should be a remunera- 
tion in proportion to individual effort, and it should be cer- 
tain, not subject to the effort of other men or the general 
functions of the management. The only practicable plan to 
give a fairer remuneration to the employees is to determine 
definite standards as to output, quality, and saving in waste 
of material, and then pay them fairly for reaching the 
standard." 

F. C. Spencer, president and treasurer, I. S. Spencer's 
Sons, Guilford, Conn.: 

"A large number of employees are only concerned in the 
immediate future; 'sufficient unto the day,' and to them 'a 
bird in the hand,' etc., so the question of an interest in the 
business naturally does not appeal to this class. Further- 



356 THE NATIONAL CIVIC FEDERATION 

more, many of us know the futility of the co-operative plan 
for conducting business. This has proved a failure in nearly 
every case, for a jealousy usually arises due to the difference 
in employment and compensation received, which is invari- 
ably reflected in the work accomplished, and in a number of 
instances has forced the business into bankruptcy. 

"It seems to be impossible to convince workmen having 
a voice in management that they are not entitled to a fancy 
profit, as experience shows. The employers in some indus- 
tries cannot afford the liberal treatment of employees which 
others easily practice; neither can the employees in some 
countries experience the prosperity enjoyed by those of other 
countries, because of a difference in natural conditions, which 
is unavoidable." 

C. W. Garrett, statistician, Pennsylvania Lines: 
'We have not had on the Pennsylvania Lines any plan or 
system of profit sharing, nor do we have any in contempla- 
tion. It is a subject in which we are greatly interested, how- 
ever. Some of our corporate officers are personally interest- 
ing themselves in a plan for facilitating the purchase of stock 
by employees, but during the period of federal control these 
subjects have of necessity been allowed to drop. 

"Railroad rates and wages are so fully controlled by 
outside agencies that the operating corporations have very 
little opportunity of determining whether any profit sharing 
plan would be advantageous." 

The Jeffrey Manufacturing Company, Columbus, Ohio: 
'We have never yet been able to bring ourselves to believe 
that we could work out a satisfactory profit sharing plan. 
Our investigations over a number of years confirm our opin- 
ion that it is a most difficult problem. Personally I do not 
believe that under our present industrial system any scheme 
of profit sharing can be instituted that would be satisfactory 
to all parties concerned. The reason for this is that the aver- 
age worker must have a certain amount of income in order 
to live. This is absolutely necessary whether there are any 
profits to share or not. Any plan of sharing profits ought to 
include the sharing of losses. This, of course, is impossible 
from the standpoint of the worker." 

George G. Lobdell, Jr., president Lobdell Car Wheel 
Company, Wilmington, Del.: 



PROFIT SHARING REPORT 357 

"Profit sharing would doubtless work all right when times 
are good and there are profits to share, but we fear it would 
only cause dissatisfaction in dull times when there might be 
nothing to divide. We have always tried to keep our men 
satisfied by paying them fair wages and affording them good 
working conditions and have had very few serious labor 
troubles in the 83 years we have been in business. We are 
now employing about 250 men at our works here." 

Arthur M. Greene, Jr., Rensselaer Polytechnic Institute, 
Troy, N. Y.: 

"I approve of his [Mr. Perkins'] scheme most heartily. 
My main objection to all profit sharing schemes has been that 
although the workman shares in the profit he doej not share 
in the losses. By Mr. Perkins' scheme this objection is re- 
moved in that the profits above those for fixed charges for 
both employer and employees are retained as a surplus until 
the expiration of several years during which time losses could 
be made up by means of this surplus. 

In Electrical Railway Undertakings. 

The American Electric Railway Association's Committee 
on Welfare of Employees, in discussing co-operation in their 
1912 report, said: 

"Probably the most advanced step in co-operation is 
that of sharing profits with the employee. This puts him 
on a footing with the stockholders of the corporation, and 
has the faculty of creating in him a close personal interest 
in the company's prosperity. He feels that the larger the 
profits, the larger will be his share, and he will be most 
exacting for economies in operation and care of company 
property boh on his own part and that of his fellow em- 
ployees. Various forms of profit sharing have been tried 
or are in vogue, the earliest of which was put into effect in 
Denver in 1898 when the company divided with the men 
any excess over certain daily receipts. The next year at 
Columbus, Ohio, the same rate of dividend was paid upon 
wages as was paid upon the company's stock. Two years 
later at Detroit the company purchased its own stock in 
the open market and allowed its employees to buy it at 
the same figure, paying for it in instalments of $5 a month. 
In 1902 in British Columbia one-third of all surplus re- 
maining af^er a 4% dividend was paid to stockholders 
was divided among the employees. In 1909 at Spokane, 



358 THE NATIONAL CIVIC FEDERATION 

Wash., stock was sold to employees on easy terms, while 
the company at Decatur, Ind., had for some time hired no 
trainmen who would not purchase one share of stock and 
subscribe for five more. It was claimed that the latter 
practice created among employees such an interest in the 
company's welfare that no avoidable accidents had oc- 
curred since its adoption, and that while some good men 
may have been kept out of the service the number ex- 
cluded was small and the company was kept free from 
the shiftless ones who were most likely to be careless." 

(1916) W. D. Marion, International President, Amal- 
gamated Association of Street and Electric Railway Em- 
ployees of America, writes: 

"With regard to 'the attitude of the American Electric 
Railway Association,' I note the profit sharing proposi- 
tions that are described therein. I am not familiar with 
the Denver or Columbus methods. I know from personal 
experience that the employees in Columbus are hardly mak- 
ing enough to keep soul and body together, and they surely 
are in need of some of the profits of that company. As ta 
the statement that the Detroit company purchased its own 
stock in the open market and allowed its employees to buy 
at the same figure, paying for it in instalments of $5 a 
month, I would say that that occurred some years ago, but 
there was nothing developed or came of it. The stock 
wasn't worth much, some few of the men bought a little 
of it, and then the proposition dropped, and no one has 
paid any attention to it for a number of years, and I doubt 
if there are ten of the employees that have purchased any 
of the stock. As to the British Columbia plan, it is true 
that in 1902 the street railways of Vancouver, Westminster 
and Victoria were owned and operated by the same com- 
pany, and it did inaugurate profit sharing, not one-third 
of the surplus after the company had paid a dividend of 
4% but one-fourth. This was in operation for about four 
years, not to exceed six, and then discontinued, It was 
agreed between the company and the employees that the 
amount going to them by this profit sharing method was 
nothing but a wage, and it was dropped entirely. As to 
Spokane, I am not familiar with that, nor with Decatur, 
Ind. Decatur is a very small place, and there couldn't be 
much there to share with any one. In Spokane the com- 
pany had opposed the organization of their men in every 
shape and form, and if they would share with them a 
little of the liberties that are enjoyed by the other work- 
men of the country, and give them the right to organize 
and speak for themselves in wage contracts and conditions 
of that kind, it would, I imagine, be worth more than any 
profit sharing plan that may have ever been inaugurated. 



?>■ 



profit sharing report 359 

In Big Industries. 

Charles M. Schwab, in an address before the Aldine Club, 
New York, February 16, 1916, pointed out that "brains are 
a bigger asset than money,'' and said: "I believe in profit 
sharing with department heads and with workmen who by 
their personal efforts add to the profits of an enterprise by 
economies or increased output. If an employee can by his 
own efforts add to the concern's prosperity, he should share 
in that prosperity." 

Mr. Schwab stated that his idea of proper management 
was to give the individual some important part in the industry 
to stimulate his interest, and that that made the manager feel 
that he was the prime factor in the enterprise. "If that is true 
of the manager and the salesman, it is equally true of the 
laborer," he continued. "In every establishment of mine I 
carry out this principle and put aside 15% for this purpose 
before apportioning the profits." The success of any big 
undertaking or industry in the future would depend on this 
profit sharing scheme he had applied, he declared. It is a 
eash distribution, based upon results obtained. 

"It has been the gratification of my life," he added, "that 
I have been able to make money for young men by bringing 
out of them their latent possibilities," and he stated further 
that "paying bonuses amounting to $5,000,000 a year is of 
little concern," and that one vice-president had been given 
$600,000 in addition to his salary in 1915, while another 
assistant had received more than $1,000,000 as his share of 
the profits. 

Mr. Schwab, in an address before the Pennsylvania 
Society of New York, December 16, 1919, said, as reported 
in the daily press: 

"II is the duty of the business man to address himself 
to seeing to it that the largest possible opportunity for 
employment and work i§ given to the greatest number of 
men, and I am myself a firm believer in the fact that the 
successful management of labor does now and will in the 
future more and more rest upon the recognition of two 
principles. These are: First, the right of the men to deal 
with their employers collectively; and, second, the priv- 
ilege of the men, through some kind of profit-sharing, to 
obtain a direct share in the profits realized upon the ar- 



360 THE NATIONAL CIVIC FEDERATION 

tides they themselves are making. What the laboring man 
wants, as I see it, is, above all else, recognition, appre- 
ciation and fellowship. He wants to be treated as a man 
of flesh and blood. 

"The kind of collective bargaining in which I believe 
is one that recognizes the right of the men themselves to 
choose their own fellow workmen as representatives to 
speak to the company and which believes in the obliga- 
tion of the company to treat these representatives indi- 
vidually and collectively with the confidence and respect 
to which they are, by virtue of the stake in the business of 
those whom they represent, justly entitled. And I believe 
in profit-sharing. Not the kind of profit-sharing that con- 
sists in a mere bonus paid out of the profits of the year, 
and added to the man's wages for the year, for that is 
merely an increase in wages and has no direct relation- 
ship to a man's own work. What I believe in is that a man 
shall have a direct share of the profits derived from the 
particular unit of work he himself is doing. 

"It is possible by a careful calculation to place a value 
upon and to estimate the probable profit from almost each 
unit of work which is done in a plant. If a man does more 
work, and helps to produce more goods or realize greater 
economies, he brings greater profits to the business and he 
himself should realize higher pay proportionately — and 
that higher pay should bear a direct relationship to the 
particular item of work upon which the man is engaged. 
In that way the employer has a direct interest in having 
the workman himself realize continually better earnings. 
In other words, there is a real partnership between the 
business and the workers in it. 

"I am sure we must all agree that if by some magic 
move we could secure not alone the good will of our work- 
men, but also their enthusiasm in their work, the workers 
of this country would multiply their output many times. 
I believe that through collective bargaining and profit 
sharing along the lines I have described, we will come 
nearer to realizing that good will and en husiasm than by 
any other route. These are not mere theories. They have 
grown up, in my opinion, out of a long and practical ex- 
perience dealing with men." 

In "Industrial Democracy." 

Mortimer L. Schiff, in placing his views as to industrial 
democracy before the public, alludes to the place of profit 
sharing in the larger scheme of his subject: 

"In any scheme of industrial democracy the worker should 
have a voice in determining the conditions of his employment; 



PROFIT SHARING REPORT 361 

there should be insurance, pension and benefit plans; there 
must be contentment, based on proper working conditions, 
and there should be participation by the worker in the results 
of the enterprise, so that his interests and those of his em- 
ployer may as far as possible become identical. ... 

'There must be no secrets as to the results of the opera- 
tions of the business, there must be full disclosure, so that 
the worker knows he is getting his full share and that it is thus 
to his interest to secure the maximum results. 

'There must be no paternalism, no interference with the 
personal liberty of the employee, no savoring of philanthropy 
or of charity. 

"Profit sharing might well be called savings sharing, as, 
in the final analysis, it is the economies in operation and the 
increase in production resulting from a real participation by 
the workers in the fruits of their industry which will make 
available the profits to be shared. 

"Profit sharing must not be confounded with stock sub- 
scription plans and bonus systems. Profit sharing is not a 
cure-all, nor, desirable as it is, is it applicable to every type 
of industry, but where it is feasible, a properly worked out 
plan, fair to all concerned, will do much toward establishing 
sound relations between capital and labor, and through the 
participation by the employees in the earnings, give them a 
real interest to stimulate production and reduce operating 
costs. 

"In my opinion, the salaried officers should participate 
in any profit sharing plan, and it should not be restricted, as 
in most proposals appears to be the case, to those working 
for a daily wage. 

'The basis of a profit sharing plan is comparatively 
simple. It must deal only with the surplus remaining after 
all operating and fixed charges, including adequate salaries 
and wages, have been met, after provision has been made for 
statutory and extraordinary reserves and after a fair return 
has been paid to the stockholders on their investment. . . . 

The real crux of the situation is what form the distribu- 
tion should take. It should not be in cash, as this is almost 
certain to be of no permanent advantage to the employee and 
does not assist him in securing a permanent interest in the 
property. It should be in the form of some security which 



362 THE NATIONAL CIVIC FEDERATION 

it is to his interest to hold. I suggest non-negotiable, regis- 
tered, convertible 6% debentures, convertible into cash at 
the option of the holder after a certain period, say three 
years, but even during that period redeemable by the com- 
pany in case the holder leaves its service." 

The "Road Toward Industrial Peace." 

Dr. Charles W. Eliot, President Emeritus, Harvard Uni- 
versity, in the New York "Times," Sunday, September 21, 
1919: 

'There is no doubt that the attitude of the great majority 
of employers toward the labor question has undergone a great 
change since August, 1914. Many of the conservative, old- 
fashioned employers are seriously alarmed and much per- 
plexed, and are inquiring as to the means of remedying the 
present confusions and disastrous tendencies. Thousands of 
employers are trying to apply in their own works or factories 
new methods of administration which will make their em- 
ployees healthier, more comfortable, and more disposed to 
work with hearty good-will for the success of the particular 
industries in which they are engaged, because they themselves 
profit by that success. A very large number of employers 
and employees alike are beginning to realize that nothing can 
cure the present crushing ills of the civilized world except 
abundant production by all the peoples ; that high wages have 
no tendency to cure the existing evils, but on the contrary 
increase them, because they raise the costs of production 
without increasing production; that the scales of wages on 
which the health, happiness and capacity for progress of the 
human race depend are badly adjusted to each other, so that 
the results to the community are unjust and often highly 
inexpedient. 

"Now is the time, then, to discuss and experiment with 
profit sharing. The arguments for and against profit sharing 
take a wide range; and so do the experiments which are 
actually under way. Many of the experiments are so ill- 
devised that they inevitably fail; and, on the other hand, some 
of those that succeed prove such valuable assets that their 
devisers conceal the nature and results of their experiments, 
lest their competitors imitate them. There is obviously no 
such thing as one best and uniformly applicable scheme of 



PROFIT SHARING REPORT 363 

profit sharing. Every individual factory should have its own 
scheme adapted to its own nature, history, and surroundings; 
and so should every separate plant of a corporation or firm 
which maintains many scattered plants. 

"Then, there are many industries to which profit sharing 
cannot be applied at all, just as there are many to which the 
eight-hour day cannot be successfully applied, unless it be 
treated as merely an acceptable plan for raising wages. . . . 

"Prudent advocates of profit sharing never represent the 
method as applicable in all industries, or as the single cure-all 
for the industrial strife. They maintain that profit sharing 
must always be associated with co-operative management, that 
is, with the effective sharing by the working people in the 
management and discipline of the works or shops, and also 
with complete accessibility of the accounts of the establish- 
ment for the elected representatives of the workers, whether 
members of the company's board of directors or merely audi- 
tors satisfactory to the employees. In other words, profit 
sharing should be only one element in a scheme having three 
parts. The object to be attained in any hopeful reorganiza- 
tion of the machinery industries is a generous sharing of con- 
trol and responsibility, and therefore of profits, when there 
are any, after wages and interest on borrowed money have 
been paid. Nothing short of that will give satisfaction to both 
parties in the present industrial strife, and nothing else ought 
to. To take together a long step on the road toward lasting 
peace employers and employees must be really partners, with 
like motives for diligence, the prevention of wastes, and the 
adoption of improvements. 

''The British Labor Co-partnership Association advocates 
the systematic acquirement of share capital by the workers 
as the principal method of profit sharing. Indeed, the British 
association argues against the payment of any cash dividend 
to payroll. In the United States several large corporations 
have offered their employees strong pecuniary inducements 
to put their savings into the stock of the employing companies. 
There are obviously serious objections to profit sharing by 
compulsory or urged purchase of shares in the employing 
company's stock. In the first place, the method is chiefly 
applicable to the higher paid employees, like heads of depart- 
ments, foremen, salesmen, and clerks. Secondly, if the em- 
ploying company urges its working people to put their savings 



364 THE NATIONAL CIVIC FEDERATION 

\ 

into its stock, or tries to induce them to do so, it takes the 
responsibility for the effects of heavy falls in the market 
price of its stock, which are sure to be resented by those of 
its employees who have invested therein. Thirdly, the method 
violates the commonest rule of judicious investors, namely, 
the rule against putting all one's eggs into one basket. Is it 
not obvious that the limited control over the management of 
a business which can be exercised by the moderate proportion 
of the working people in any plant that can become share- 
holders to a small or even a large extent in the employ- 
ing company will be only a short step toward industrial 
peace? . 

"Any kind of profit sharing will succeed which appeals 
to the fundamental motives tjiat have for many centuries past 
induced men, rising out of barbarism, to be industrious and 
frugal, and to keep their promises and contracts. These 
motives are love of home and its surroundings, and of parents 
and brothers and sisters in the first home and of wife and 
children in the second, the desire to have steady employment 
and to accumulate property for the sake of home and de- 
scendants, and the hope of freedom from the dread of dis- 
abling sickness or accident, premature death, and a forlorn 
old age. 

"It remains to consider another adjunct of profit sharing 
in establishing permanent industrial peace. Co-operative 
management and publicity for the employers' accounts have 
already been mentioned. That adjunct is the co-operation of 
capital and labor in the prevention of poverty. There must 
always be wide differences in respect to material possessions 
among the numerous individuals that compose society; be- 
cause the capacity of different individuals in respect to ac- 
quiring and keeping possessions is so infinitely various; but 
distressing or degrading poverty should cease to exist in 
democratic society. The causes of the extreme poverty which 
exists in many, and indeed most, civilized communities, are, 
first, ignorance, stupidity, and laziness, and, secondly, sick- 
ness and premature death or disability, partly due to un- 
toward accident, downright misfortune, or irresistible calam- 
ity, but chiefly to human vices and the diseases consequent 
thereon, and to the multifarious wrongdoing of cruel or reck- 
less men toward women." 



profit sharing report 365 

Summary of Employers' Opinions. 

(1916) In a few of the cases examined the employers 
are very enthusiastic over the success of their profit sharing 
ventures. The approval of a considerable number is indi- 
cated by the retention of their plans from year to year. 

The following are some of the favorable comments of the 
employers in their own words: 

1. Promotes more continuous service. 

2. Nine per cent reduction in the cost of production. 

3. Secures more regular attendance. 

4. Builds up confidence. 

5. Eliminates the rolling stones and encourages home 
building. 

6. Successful — never had a strike. 

7. Enables company to keep employees during the 
rush season. 

8. Creates a better spirit among the workmen. 

9. Expenses kept down — salesmen work harder. 

10. Tends to promote efficiency and stimulate en- 
endeavor. 

11. Promotes regularity of employment. 

12. Increases effectiveness and profits of the business. 

13. Noticeable increase in interest and loyalty on the 
part of those retaining their stock. 

14. Produces greater spirit of co-operation between 
employer and employee. 

15. Great benefit in securing the co-operation of those 
in responsible positions. 

The objections to the profit sharing plans as stated by the 
employers may be summarized as: 

1. Failure of employees to grasp the significance of 
the profit sharing. 

2. Dissatisfaction on the part of the employees when 
the profits are small. 

3. Employees count on bonus payments and make use 
of them in advance. 

4. Preference on the part of employees to have their 
wages increased instead of receiving a bonus. 

5. The sale of stock to outsiders in those cases where 
the stock is distributed. 



366 THE NATIONAL CIVIC FEDERATION 

WAGE-EARNERS' STOCK INVESTMENTS. 

(From an article on the Democratization of Industry.) 

Ralph M. Easley. 

(1916) ''There are two few enterprises where stock in 
a corporation is continually a safe investment of the savings 
of wage-earners. How many of the million employees on the 
railroads, for instance, would have been safe during the last 
few years in putting their savings into the stock of the roads 
upon which they were working? We instantly think of the 
New York, New Haven and Hartford, the Rock Island and the 
'Frisco, as conspicuous examples, but there is a long list of 
other railroads which have not been charged with corruption 
or mismanagement whose stocks nevertheless have gone down. 
Stock participation would not be practicable at all in the 
building trades, and great construction works, public and 
private, where hundreds of thousands of employees are en- 
gaged, because contractors do not necessarily employ the 
same men on two consecutive jobs. In the printing trades, 
how many members of the Typographical Union would feel 
safe in investing in the stocks of the newspapers or job print- 
ing offices where they work? On certain public utilities, 
what seem to be fairly successful plans have been inaugurated, 
but they are generally those which the Public Service Com- 
missions have been able to regulate and hold down to legiti- 
mate financing. 

'There are here and there comparatively small corpora- 
tions which have been measurably successful financially for 
a series of years, and there are a few very large corporations 
like the United States Steel Corporation, the International 
Harvester Company, the American Sugar Refining Company, 
the Standard Oil Company and the American Tobacco Com- 
pany, whose preferred stock has been a safe investment. 

"Another very serious objection which is made to stock 
participation is that the men, for the first time in their lives, 
begin to watch the stock market, and this is regarded by many 
as not a very wholesome habit. Following the stock market 
leads to 'taking a flyer' and that generally leads to taking a 
loss. A workingman whom I know put a little money which 
he had saved into railroad stock that is regarded as the best 



PROFIT SHARING REPORT 367 

in this country and he has held on to it and received his divi- 
dends regularly. In keeping himself posted on stock market 
matters, however, the gambling spirit got hold of him and he 
thought he ought to do something better than get his regular 
6% dividend, so he persuaded his wife to put the $600 she 
had saved into another stock on margin and it was soon wiped 
out." 



368 THE NATIONAL CIVIC FEDERATION 



ATTITUDE OF THE TRADE UNIONS. 

So far as organized labor is concerned, it is generally 

opposed to all profit sharing schemes. 

Theoretically, one would suppose that there could be no 

possible objection to the periodical cash distribution of a 

percentage of profits, and yet general criticisms on the part 

of the employees are: 

That market wages are not paid where such cash dis- 
tributions are made; 

That they prefer to have a fixed wage scale upon which 
they can count; and 

That when such percentages of profits are received they 
are regarded as gifts, which place the workers under obli- 
gation to the employer and in a position in which they can- 
not ask for increases in wages or salaries to which they 
may be justly entitled. 

In relation to stock selling plans, some of the criticisms 
are: 

That foremen will keep down the wages of the rank 
and file in order that the dividends on stock owned by the 
foremen may be higher; 

That the aim of the company in selling stock is some- 
times circumvented, as in the case of the Northern Pacific 
Company, which experienced disappointment because the 
stock was sold to the employees at a low price and when it 
rose the employees promptly sold it instead of remain- 
ing participators; and 

That, although stock may be sold on the instalment 
plan, comparatively few in the rank and file can afford to 
take advantage of such opportunities; 

Then there is the question of possible loss by a com- 
pany in any given year and employees who are owners 
of stock are likely to become interested in watching the 
market and to cultivate the gambling instinct. 

Typical Comments. 

Samuel Gompers, president, American Federation of 
Labor, (1916): 

"This proposition has never been seriously considered 
by the organizations of labor. I desire to say further that 



PROFIT SHARING REPORT 369 

it has come under my observation that some employers 
who have inaugurated systems of so-called profit sharing 
have pared down the wages of their employees so that 
the combined sharing of profits and their wages did not 
equal the wages of employees of other companies in the 
same line of industry. What we are especially interested 
in more than profit sharing is a fair living wage, reason- 
able hours and fair conditions of employment." 

Mr. Gompers states, February, 1920, that he does not de- 
sire to make any changes in the foregoing statement. 

Warren S. Stone, grand chief, International Brother- 
hood of Locomotive Engineers: 

"I am opposed to profit sharing, of any kind, under 
any name. I believe in paying the worker fair wages and 
allowing him to look after his own interests. All forms 
of profit sharing, be they a cash distribution or a bonus, 
or the selling of stock at low rates, are subject to the 
same abuses. 

"They have a tendency to speed up the worker, and, 
in addition to that, they make him resigned to work under 
conditions which otherwise he would not tolerate for a 
single day, were it not for the hope of the bonus in the 
near future which is always being kept before him. 

"The various stock subscription plans are in no sense 
profit sharing. A moment's examination of the subject 
will show that I am right. If an employee purchases stock, 
whatever he receives by way of dividends he receives in his 
capacity as stockholder and not as employee. If a divi- 
dend is declared he is entitled to it as a matter of absolute 
right — whether he continues as an employee or not. Now 
whatever he may receive by way of bonus on his stock, 
such as an extra five dollars per share per year provided he 
has been a certain number of years in the employ of the 
company, is paid to him because he has given the company 
something in addition to his labor from day to day, 
namely, a continuity of service, the value of which to the 
company far exceeds the bonus on the stock. Moreover, 
when an employee is induced to invest his savings in stock 
of the company for which he works, there is brought about 
a situation the practical result of which is an insurance 
against strikes. Therefore, the wage addition which the 
stockholding employee receives is not a share of the profits 
but a payment for a substantial consideration which the 
company receives in addition to the employee's labor. 

"So much for the theory of that type of profit sharing. 
Now a word as to the amount of the employee's share of 



370 THE NATIONAL CIVIC FEDERATION 

the so-called profits. Take the United States Steel Corpo- 
ration as a fair example. An employee earning $900 per 
year subscribes for one share of preferred stock and pays 
for it in instalments running over one year. If he holds 
on to both his job and his stock he gets an annual bonus 
of five dollars a year for not exceeding five years. If 
that man should remain with the company for ten years, 
he would receive as a payment for that continuous service 
the sum of $25 or approximately only one-quarter of 1% 
of his wages. 

"But quite apart from the fact that stock selling is not 
profit sharing, either in principle or in practice, there is. 
still another and fundamental objection to it — one that 
goes to the basis of corporate management in the country — 
and that is that, taken as a whole, public utility and indus- 
trial stocks are not proper investments for the savings of 
the ordinary employee. Furthermore, they never will be 
proper investments for him until he can ascertain with 
some degree of precision and from some authoritative 
source, that for every dollar of par value of stock issued 
the company has back of it one dollar in cash or its 
equivalent in actual property. That situation will never 
exist under the present corporation laws of the various 
states, under which it is possible to issue reams of so- 
called securities against good will — dubious patent rights 
and other considerations, the value of which is fixed by a 
board of dummy directors, carrying out the instructions 
of promoters who will in turn unload the stock on a gul- 
lible public or unsuspecting employees. 

"The trouble with selling stock at low rates is that 
until there is some form of regulation of stock issuing 
it does not mean anything. A very large percentage of the 
stock held to-day, and that in the open market, repre- 
sents no real value, but is simply an added drain upon the 
productive efficiency of the employees and is issued wholly 
and solely to take up any surplus that might be left over 
after paying money a fair dividend on the real value of the 
investment. Until the stock can be guaranteed at its face 
value, it does not mean anything to the worker; and, 
again, it has a tendency to make the worker satisfied with 
the company or corporation and work harder than ever 
before, perhaps for starvation wages, in the hope that he 
can get his stock finally paid for, and then too often he 
learns, to his bitter disappointment, that it represents no 
real value after all. 

"The savings of the workingman are, morally at least, 
the property of his wife and children; they should be in- 
vested with the same care and prudence which the law re- 
quires for the investment of the funds of widows and or- 



PROFIT SHARING REPORT 371 

, phans, and any scheme which seeks to divert them into spec- 
ulative channels and tie them up to a particular job is 
vicious in principle and cannot be too emphatically con- 
demned. 

"So far as giving the employees a ocmpelling voice in 
the management of a company through their stockholding 
acquired under the subscription plan is concerned, the 
mere suggestion of such a thing is nothing more nor less 
than a grim joke. While it is theoretically possible for 
the employees to gain the stock control of a corporation, 
we know, as a matter of every-day observation, that such a 
thing is in practice utterly impossible. Even if it were 
possible for the employees to acquire 51% of the stock of 
a solvent corporation, they would be unable to dislodge 
the management, as experience has frequently shown how 
easy it is for insiders to water the capital stock and issue 
indirectly to themselves a vast amount of additional se- 
curities, by which control is not only retained but future 
earnings of the corporation are capitalized." 

Mr. Stone writes, February 25, 1920: 

"I have not changed my opinion in the least on this 
question, for it is today the same as it was in 1916, and 
I do not care to add anything to my statement made at 
that time." 

James Duncan, president, Granite Cutters' International 
Association of America, January 29, 1920: 

"There is little if anything done in the granite cutting 
industry on the subject of profit sharing. It is not looked 
upon as a cure for any of our trade ills. The members of 
our association would prefer a good fair wage rate. Evi- 
dently where the profit sharing system has been discussed 
employers have only favorably looked upon it by expect- 
ing that the men in their employment who would be par- 
ties to the plan would in return use their influence in trade 
meetings in favor of the firm rather than in favor of the 
workmen. I know of no change of feeling among work- 
men upon the subject since the issue of your profit shar- 
ing document in 1916." 

John P. Frey, editor "International Molders' Journal," 
states that his experience prompts him to say that in almost 
every instance profit sharing schemes operate to pay the 
workers a lower wage in proportion to their output, to make 
trade union organization most difficult if not impossible, and 



372 THE NATIONAL CIVIC FEDERATION 

to make it difficult to bring about a condition where the 
workers can take up the question of their terms of employ- 
ment as an organized body. 

Mr. Frey further writes, February 3, 1920: 

"The trade-union movement and individual members 
have not, so far as I can discover, undergone any change 
or modification of the attitude always assumed toward 
profit sharing. Our experience has been that it is more 
difficult to bring about organization where a system of 
profit sharing has been established, the wage-earners being 
fearful that they would lose their share if through joining 
the Molders' Union they lost their position." 

John Golden, president, United Textile Workers, Febru- 
ary 6, 1920: 

"I have not changed my views one iota on this subject. 
My experience with profit sharing in the textile industry 
has been that it was a scheme to dodge the payment of the 
correct scale of wages paid in the various branches of our 
industry or else to act as a buffer against organization of 
the employees. In addition to this in most all cases the 
company has the sole arrangement of working out the 
profit sharing plan, even to the fixing of the amount of so- 
called 'profit' to be shared among the employees. Our 
usual experience also is where the profit sharing plan 
exists the plants do not pay the union scale of wages." 

John A. Voll, president, Glass Bottle Blowers' Associa- 
tion of the United States and Canada, February 4, 1920: 

"In my opinion the general opposition on the part of 
trades unionists to the principle of profit sharing has not 
undergone any modification the last few years; in fact, 
if anything, the opposition is stronger owing to the fact 
that profit sharing is used for the purpose of suppressing 
organization among workmen. As I see it, there would be 
no objection to profit sharing provided the workmen were 
granted the right to organize and bargain collectively; 
if profit sharing was practised in addition to that, I 
believe the opposition would gradually fade away. 

"There is no relation between the union scale and the 
scale in profit sharing concerns, because there is no per- 
manency in the profit sharing scale; keen competition or 
business reverses may wipe out the profit and without an 
organization the employees are in great danger then of 
having their wages reduced. I would say that there are 



PROFIT SHARING REPORT 373 

special difficulties in organizing the mechanical force of 
profit sharing plants." 

M. F. Tighe, president, Amalgamated Association of 
Iron, Steel and Tin Workers, January 31, 1920: 

"So far as my knowledge of any plan of profit sharing 
now existing goes, there has been no change in sentiment 
in the opposition to it from the organizations of labor. 

"Our position is and has been that the profits that 
should be the legitimate property of the toiler, whose 
work made such possible, should be included in his daily 
wage. The relation between the scale of our organization 
and the system called profit sharing is as close as any sys- 
tem in existence. Our union scale is a sliding scale with a 
minimum rate. It gives to the worker a share of the 
profits of the material he turns out, as it is based on the 
selling price of the material. The question of organiza- 
tion among those who now are employed where such prac- 
tice exists is problematical and cannot be satisfactorily 
answered. In some places it has effect and in others none 
whatever." 

William H. Johnston, president, International Associa- 
tion of Machinists, February 25, 1920: 

"The profit sharing plans which have come to my ob- 
servation are intended to deceive the wage-earners. A num- 
ber of firms have inlroduced so-called profit sharing as a 
subs.i'u e for a minimum wage, and as a result of the 
hypocrisy and sham connected with profit sharing the 
workers generally are very skeptical of those who are seek- 
ing to promote so-called profit sharing. I do not believe 
that he trade unionises of our country have had any cause 
to change or modify their opposition to this method of 
compensation." 



Hugh Frayne, general organizer, American Federation 
of Labor, (1916): 

"There are many schemes and methods adopted by 
employers, especially among the larger corporations, to 
prevent their employees from organizing trade unions and 
in order to overcome any signs of unrest among them 
they generally inaugurate some system of bonus paying 
to the workers which is nothing more than a socialized 
form of charity. 

"Some employers adopt the plan of giving presents 
to their employees during the holiday season and make 



374 THE NATIONAL CIVIC FEDERATION 

a great deal of capital out of same, even going so far as 
to boast of how kind and generous they are to their em- 
ployees, which they want it understood they are not 
obliged to do, only through the goodness of their hearts, 
but invariably you will find that there is an underlying 
motive in this commercialized philanthropy and we find 
that those who are the most favored by the employers be- 
cause of their willingness to take the initiative in all 
schemes for the promotion of a greater production bring- 
ing larger profits to the employers without any extra com- 
pensation to the workers, are the ones who get the most 
expensive presents when they are being given out. 

"The selling of stock to employees is another plan 
used by employers chiefly for the purpose of weaning them 
away from any thought of becoming members of a trade 
union. From one to five shares of stock in the concern are 
usually sold to the employee at par, sometimes below that 
amount, and in other cases the stock is given free of charge 
while the rights of the employee holding this stock are 
never recognized in any way so far as the firm or its affairs 
are concerned. The worker is constantly reminded, how- 
ever, that to join a union or to go on strike or in any way 
antagonize the company would seriously jeopardize his 
own interest as a stockholder of the concern." 

Mr. Frayne writes, February 25, 1920: 

"There are many schemes and methods adopted by em- 
ployers, especially the larger corporations, to prevent their 
employees from organizing trade unions, and in order to 
overcome any signs of unrest among them they generally 
inaugurate some system of bonus paying to the workers 
which is nothing more nor less than a socialized form of 
charity. 

''One of the most popular forms is that of the profit 
sharing system which entitles the worker to certain bonuses 
at the end of fixed periods, usually at the end of the year, 
based upon the earnings of the company and the amount 
of increased efficiency of the particular employee. When 
putting this system into practice the most efficient work- 
ers, whether skilled or unskilled, are selected to perform 
certain tasks which are rated to the very highest limit. The 
best workers are then speeded up until they reach that limit 
after which all others are expected to do likewise. Only 
a small percentage are able to reach this high efficiency set 
by the experts, and while they have through the speeding 
up process produced a larger amount of work during the 
year with the hope of receiving the bonus at the end of 
the specified time, they receive practically nothing for the 



PROFIT SHARING REPORT 375 

extra work done because they have not qualified and 
reached the high standard set by the company whose 
profit from the extra work performed is a great financial 
advantage to the company and a great disadvantage finan- 
cially and physically to the worker who has been speeded 
up to a point beyond human endurance. Even those who 
are fortunate enough to reach the high standard set by the 
experts and receive the bonus are not able to keep up this 
pace for any length of time, and within a few years at 
most they are rated with those who are not entitled to re- 
ceive the bonus because they have become unfit on account 
of the physical strain caused by the high pressure at which 
they have been compelled to work. 

"Some of the employers adopt the plan of giving pres- 
ents to their employees during the holiday season and make 
a great deal of capital out of same, even going so far as 
to boast of how kind and generous they are to their em- 
ployees, which they want it understood they are not 
obliged to do, only through the goodness of their hearts, 
but invariably you will find that there is an underlying 
motive in this commercialized philanthropy, and we find 
that those who are the most favored by the employers be- 
cause of their willingness to take the initiative in all 
schemes for the promotion of a greater production, bring- 
ing larger profits to the employers without any extra com- 
pensation to the workers, are the ones who get the most 
expensive presents when they are being given out. 

"The selling of stock to employees is another plan used 
by employers chiefly for the purpose of weaning them 
away from any thought of becoming members of a trade 
union. From one to five shares of stock in the concern 
are usually sold to the employee at par, sometimes below 
that amount, and in other cases the stock is given free of 
charge, while the rights of the employee holding this 
stock are never recognized in any way so far as the firm 
or its affairs are concerned. The worker is constantly re- 
minded, however, that to join a union or to go on strike, 
or in any way antagonize the company, would seriously 
jeopardize his own interest as a stockholder of the concern. 

"There are other schemes under various names and 
titles that are used for the purpose of exploiting and tak- 
ing advantage of working people, especially among the 
unorganized, all of which are promoted with the object 
in view of getting the highest maximum at the lowest 
minimum cost. 

"When making a comparison of these various schemes 
to uplift the workers with what the trade unions have done 
in the past, are doing at present and will continue to do in 
increased proportion in the future, it is very easy to de- 
termine that these false theories for the social uplift are 



376 THE NATIONAL CIVIC FEDERATION ! 

not practical because they are economically unsound and 
are promoted for the sole purpose of profit to the em- 
ployers and to the great disadvantage of the worker. 
There is not a group of organized men or women, skilled 
or unskilled, who do not receive a higher wage, shorter 
hours of employment and generally improved conditions 
than those who are engaged in employment where the 
bonus or profit sharing systems and other welfare schemes 
are in operation. 

: 'The American Federation of Labor is opposed to all 
bonus systems, no matter in what form they may be prac- 
ticed, realizing that the individuality of the worker is 
being gradually destroyed, thereby preventing any ini- 
tiative on his part to become free and independent, in- 
stead of dependent upon the mere whim of the employer, 
who may at any time discontinue the payment of the bonus 
without the worker having any say in the matter. 

"Organized labor believes in the highest standards of 
living for the workers and has proven by trade union ac- 
tivity that this condition can be best accomplished through 
organized effort. Members of trade unions, whether 
skilled or unskilled, receive the highest wages, work the 
shortest number of hours, enjoy better treatment and gen- 
eral conditions of employment and are protected by their 
union affiliations from unjust treatment from employers. 
Aside from this the unions protect their members out of 
their funds in strikes, lockouts, out of work and sick and 
death benefits which no worker can ever hope to receive 
from an employer through any bonus system no matter 
how generous its provisions may seem to be. 

"Bonuses or profit sharing to the worker at the end of 
the year is money that they earned during the year and 
should have received in their weekly or monthly pay en- 
velopes. If this were done it would permit the workers 
to provide many immediate necessities instead of having 
to wait a whole year to receive a gift of something that was 
theirs by right, but which was withheld for the various 
reasons which I have mentioned. 

"The best and most efficient workers are those who are 
free to join with their co-workers in the trade union 
movement, which not only brings to them all and more 
than any scheme of doubtful motive, but at the same time 
never attempts to take from them their rights and liberties 
as free men." 

Jere L. Sullivan, general secretary-treasurer, Hotel and 

Restaurant Employees' International Alliance, January 30, 

1920: 

"The workers of the catering industry have had but 



PROFIT SHARING REPORT 377 

few chances to examine the results of profit sharing. So 
far as we have knowledge there is but one hotel corpo- 
ration which employs that method of bestowing upon em- 
ployees added compensation, and the plan has been in use 
less than two years. 

"Speaking from personal contact with the men of vari- 
ous unions, I can say that most of them carry the impres- 
sion that profit sharing as conducted is in reality an effort 
to wean the workers away from the idea of uniting in labor 
unions. If profit sharing had proved a good substitute for 
organizations of labor, it seems to me that it would have 
made greater headway than appears to be the case. If 
profit sharing were conducted with fairness it might prove 
the claims of its promoters and advocates, but most of the 
workers feel that without an organization to fall back on 
to protect their interests any method, no matter what its 
name, might be abused and result in the opposite from 
what is claimed for it. 

"Wage-earners seem to prefer to get theirs now and in 
the pay envelope instead of taking chances of added coin 
by way of profit sharing systems." 

Jacob Fischer, secretary-treasurer, Journeymen Barbers' 
International Union, January 29, 1920: 

"Our organization is in no way affected directly by 
profit sharing in our industry, as we have no shops what- 
ever operated on that system. The members of our or- 
ganization work on a guaranteed salary with a commission 
on all receipts over certain amounts, but actual profit shar- 
ing does not affect them." 

H. J. Conway, secretary-treasurer, Retail Clerks' Inter- 
national Protective Association: 

"In regard to what is called to-day stockholding or 
stock ownership, from the viewpoint and experience we 
have had with it through our association, instead of being 
in favor of it, we condemn it as being non-beneficial to 
employees in the retail industry, in so far as the past plans 
at least have proven. We have found that, in the greater 
number of instances which came directly before us, the 
plan was brought into effect primarily for the purpose 
either of preventing or breaking strikes, should any arise 
in an attempt to secure a changed working condition for 
the betterment of the employees. 

"Plausible stories are brought forth in the guise of an 
increased wage through the profits derived from being a 
stockholder, but so far as we have any information no 



378 THE NATIONAL CIVIC FEDERATION 

profits have been received. On the contrary, those who- 
have invested or were presumed to be given the stock pay- 
able from the profits derived from the business have never 
been able to realize any benefit therefrom; and those who 
paid part of it have great difficulty, when the occasion 
arises, to sever their relations with the employer or the 
stock concern, and to dispose of their stock, either at a 
profit or at the price which they had paid. 

"It has also been a means to retard the advancement 
of employees through the securing of more profitable em- 
ployment, for once inveigled into it the many bright spots 
in the future constantly kept before their minds create a 
hope that at some day results will come. They hesitate to 
change their positions when opportunity arises through 
which they could gain increased wages and possibly more 
congenial employment." 

J. C. Skemp, grand secretary-treasurer, Brotherhood of 
Painters, Decorators and Paperhangers of America: 

"Profit sharing as practiced, at its best, is an inade- 
quate and unsatisfactory remedy for our industrial ills. 
Where the experiment is made in good faith the facts that 
the employer reserves the right to discharge a workman 
at any time, that he fixes the worker's share of the profits 
and that the worker has no voice in the management of the 
business, rob the plan of any value it otherwise might 
have. 

"The dividend to the workman is merely a gift to be 
made or withheld at the will or the whim of the employer — 
disguised charity. As usually employed it is a method for 
bribing the workman to remain outside of the union of his 
craft, to discourage demands for better wages, to stimulate 
output and increase profits for the employer, the workman 
to receive a small share of his increased earnings." 

Mr. Skemp writes, January 30, 1920: 

"Trade unionists are opposed to existing profit sharing 
plans. They prefer that their share of the returns from the 
industry shall be in the form of a fixed wage, which pre- 
serves their independence. The acceptance of a share in 
the profits of a business in the management of which he 
has no voice necessarily places the worker under a humili- 
ating obligation. It is a favor granted. The only prac- 
tical and acceptable profit sharing plan yet advanced is 
that proposed in the report made to the Industrial Council 
for the building industry of Great Britain, by its commit- 
tee appointed 'to consider the question of scientific man- 



PROFIT SHARING REPORT 379 

agement and reduction of cost, with a view to enabling 
the building industry to render the most efficient service 
possible.' A copy of this report might be obtained from 
the Secretary of the Council, 48 Bedford Square, Lon- 
don, W. C." 

Walter W. Drayer, general secretary-treasurer, Jour- 
neymen Stone Cutters' Association: 

"A cash distribution or a bonus is usually given with 
the understanding that employees are not to affiliate them- 
selves with a labor organization. Such being the case, 
employees must take employment at the wages offered by 
the employers rather than collectively establishing a wage 
for their labor. 

"In most cases it is a form of involuntary servitude in- 
asmuch as such cash distribution is denied those em- 
ployees who might wish to terminate their employment 
to better their conditions. They are denied this cash dis- 
tribution if they leave their employment before a stated 
period." 

James Wilson, general president, Pattern Makers' 
League: 

"The systems prevent men from organizing, and there- 
by an employee works for less wages — all bonuses in- 
cluded — than he would receive if he were organized." 

C. F. Quinn, secretary-treasurer, Pennsylvania State Fed- 
eration of Labor: 

"It is, as the children have it in their play 'Open 
your mouth and shut your eyes and see what God' (the 
employer) 'will give you.' 



? 5? 



George L. Berry, president, International Printing 
Pressmen and Assistants' Union of North America: 

"I would oppose any such scheme as that, even if it 
did not militate against the trade organization, unless the 
workers, through a well-established proprietary right, 
were placed in a position of determining the matter of 
procedure, policy, etc." 

James P. Holland, president, New York State Federa- 
tion of Labor: 

"A cash distribution makes some men work hard to the 
detriment of other men. The bonus system makes men 



380 THE NATIONAL CIVIC FEDERATION 

dissatisfied, and they are unable to air their grievances for 
the reason that they would lose their bonuses. 

"The selling of stock to the men at a low price is the 
means of stopping them from organizing." 

Andrew J. Furuseth, president, International Seamen's 
Union of America : 

"Profit sharing is a truce that the employers seldom 
enter into except with the purpose of holding the wages 
down. You cannot get any arrangement with the em- 
ployers unless you are strong enough to compel them to 
pay." 

H. B. Perham, past president, Order of Railroad Teleg- 
raphers: 

"Wage-earners are entitled to what they have earned 
as soon as their day's work is done, and they are not en- 
titled to any more. A cash distribution annually means 
that the money has been withheld from them." 

Thomas J. Donnelly, secretary-treasurer, Ohio State 
Federation of Labor: 

"If there is a profit to give, it should be given daily 
and weekly in reducing hours and increasing wages." 

Paul Scharrenberg, secretary-treasurer, California 
State Federation of Labor: 

"I am utterly opposed to any scheme or plan of profit 
sharing of the variety so far proposed in this country." 

B. A. Larger, general secretary, United Garment Workers 
of America: 

"In most cases where the cash distribution or bonus 
is given, wages are low and hours long." 

William Green, secretary-treasurer, United Mine Work- 
ers of America: 

"If the profits of a concern will permit of distribution 
among the men employed, instead of being distributed as 
profits of the concern, the money should be paid to them 
in wages that would be regarded as just and fair. This, 



PROFIT SHARING REPORT 381 

in my experience in dealing with laboring men, gives 
more general satisfaction than any profit sharing plan of 
which I have ever heard." 

John Fitzpatrick, president, Chicago Federation of 
Labor: 

"For my part, I think these schemes are all totally 
bad and are no more nor less than a fraud, a deception 
and a snare. . . . The slogan of the American labor 
movement, 'A fair day's pay for a fair day's work,' is the 
manly, human, honest, fair way of meeting the question 
of work and wages. A fair day's pay would involve 
decent standards of living, a comfortable home, sufficient 
for proper recreation and enjoyment and the things that 
make this life worth living. It would mean proper safe- 
guards to conserve the ability of the breadwinner and en- 
able him to continue for the longest period of time to 
provide for and protect himself, his home and his loved 
ones." 

The position of the conservative division of English labor 
is thus expressed by J. R. Clynes, General Workers' Union, 
recently Food Controller: 

"Co-partnership and profit sharing are viewed with 
suspicion by the trade unions. There was good cause for 
this view. For many employers who, in previous years, 
instituted schemes for profit sharing or co-partnership only 
called the workers in as 'partners' when everything had 
been sealed for them and when the principles and even 
the details of the schemes had been determined by boards 
of directors. Worse than this happened in some cases. 
Employers devised their schemes wi^h the object of de- 
stroying trade union organization and thereby taking from 
the employees in a particular works the possibility of 
being aided by their fellow workers in outside establish- 
ment. Profit sharing, like compulsory arbitration, is not 
likely to receive the official approval of trade unions." 



382 THE NATIONAL CIVIC FEDERATION 



SOME FRENCH TYPES. 

A society for the promotion of profit sharing, recognized 
by the French government as of "public utility," has been in 
existence in France for more than forty years. 

By the French system the profits allotted the wage-workers 
usually go either to purchasing stock or to a pension fund, 
while other benefits or welfare work take subordinate place. 
In 1914, 120 firms or companies in France were sharing 
profits in some form with their employees. Of these, 23 were 
manufacturers of machinery or woodwork; 23 were banks, 
insurance and theatres; 23 were food or clothing dealers; 
14 were in paper making and printing; 14 in the building 
trades, painting, etc.; 14 in agriculture and fisheries, and 9 
in railways, mines and street car systems. Besides, nearly 
500 co-operative societies were reported as paying to their 
employees bonuses varying from 10 to 60%. 

A classification of the methods employed by French firms 
in various forms of profit sharing, contributed by Edward 
Deason to the English periodical, "Co-partnership," in Octo- 
i>er, 1918, gave the following: 

1. A percentage on the net profits shared over the 
wages of workers, the management, and various benefit 
funds. This is the system of Leclaire, Laroche-Joubert, 
Chaix, and others. 

2. Sharing the net profits on the wages and interest of 
the capital. It was first introduced in France by Godin 
in 1876, who accompanied it by an ample system of benefit 
funds and housing. 

3. Sharing the net profits on wages and capital. 
There are only a few examples of this method in France. 

4. A percentage on the sales, total business done, or 
on the total output of manufacture. Many of the print- 
ing firms have followed this method. 

5. Sharing out the difference between estimate and 
actual cost. The city of Paris works its paving stone 
quarries on this plan. Joya & Co., boiler makers, of 
Grenoble, use the method. 

6. Entire share capital held by employees only. The 
system of the "Bon Marche" of Paris and Godin of Guise. 



PROFIT SHARING REPORT 383 

Those not holding shares receive a special bonus decided 
annually. There are many "benefit funds" entirely sup- 
ported by the firm. 

7. Annual bonus on amount of savings effected by 
employees. The big Paris store Galeries Lafayette adds a 
similar amount to that saved by the employees. 

8. Annual bonus (variable) entirely at discretion of 
proprietors. Part of the plan of the Bon Marche, of Mul- 
ler, Roger & Co., engineers of Paris, and of the printing 
firm Gounouilhou at Bordeaux. 

9. The system of Michelin & Co., of Clermont-Fer- 
rand. Certificates bearing annual interest are given to 
employees of merit. Also a very comprehensive list of 
benefits for illness, accident, old age, housing, &c. 

10. The Ford system, at their works in Bordeaux and 
Paris. From 25 to 33% is added to the wages. An 
effort is made to educate the worker so that he does his best 
while in the factory. Mr. Ford believes the worker should 
be trusted with the money instead of its being used or 
invested for him. 

Following are typical of profit sharing methods in France: 

Edme-Jean Leclaire, Paris house painter, is known as the 
father of profit sharing in France. In 1838 he established a 
mutual aid society for his employees, and four years later 
riad 300 men on daily wages. His usual dividend to labor 
was 12%, one year reaching 24%. While he began his profit 
sharing with only his regular workers, from 1870 he shared 
with all. The house of Leclaire, now known as Brugniot, 
Laurent & Co., usually apportion of the net promts 15% to the 
managers, 35% to the mutual aid society and the other 50% 
to the employees in ratio of their compensation. 

The assets of the mutual aid society on April 1, 1919, 
were 4,764,350 francs. This society, however, has but 97 
active and three honorary members in a force numbering, in 
1914, 1,400. The society benefits are 8 francs a day (in- 
creased from 3.50 before the war), medicines, and the serv- 
ices of a doctor. The pension after 50 years of age is 2,000 
francs. In 1919 there were 140 pensioners, 62 retired 
auxiliaries and 31 benefiting widows. The sum disbursed in 
pensions reaches more than 220,000 francs. The operation 
of the establishment is otherwise characterized by various 
financial and educational benefactions. 



384 THE NATIONAL CIVIC FEDERATION 

The "Familistere de Guise" is known throughout the 
world as an economic development of labor co-partnership 
and community living. Its founder, J. B. Andre Godin, set 
up in 1840 at Guise, a small town in the northeast of France, 
a manufactory of heating apparatus. In 1876 he introduced 
profit sharing and in 1880 established a joint stock company 
with various forms of co-operation. New co-operative or 
even "communistic" features were added from time to time. 
These included the care of young children in groups by com- 
petent nurses ; several grades of schools with vocational train- 
ing; a community theatre; co-operative supply stores on the 
Rochdale system; methods for the higher education;, homes 
for a large proportion of the workmen and their families in 
a "palace" designed with due regard to comfort, cleanliness, 
beauty and general utility. Before the war the number of 
employees was about 2,300. In 1910 more than 1,400 had 
served more than 10 years and 675 more than 20 years. The 
great works of the company were built at one side of the Oise, 
not far from its source, and the buildings pertaining to home 
life on the other side, the whole surrounded by farm lands. 

When M. Godin died, in 1888, he bequeathed to the com- 
pany $600,000 and the capital later became $1,200,000, the 
annual business reaching $1,600,000 and the total assets 
more than $2,300,000. The net profits of the Godin estab- 
lishment were divided, 75% to wages and to capital interest 
and 25% to the management staff. Capital took 5%. There 
were preferential rates of dividends to employees for long 
service. Persons of one year in service received one share ; of 
three years, one and one-half shares, and of over 20 years, 
two shares. 

The works and the Familistere were destroyed during the 
war by the Germans. In 1914, August 27 and 28, while the 
greater part of the population of the district, fleeing from 
imminent invasion and overflowing the roads into the sur- 
rounding fields, rushed toward Laon, Chauny and La Fere, 
Guise became the center of a furious battle. Some of the 
houses of the town were burned or battered down by shelling. 
The Germans then methodically pillaged others and destroyed 
the left wing of the main building of the Familistere with 
the home possessions of more than 100 families by whom it 
had been occupied. Then followed the removal to Germany 



PROFIT SHARING REPORT 385 

of all the stores of raw material and articles belonging to 
the community. In 1915, requisition was made of turning 
lathes and parts of machines. In 1916, the molding instal- 
ment of the foundry and all other mechanical equipment 
except the sawmill were destroyed. In 1917, all the standard 
forms, made of fine metal, were removed to Germany. In 
1918, the statue of Godin was pounded to pieces, and between 
October 12 and November 11 the inhabitants who were left 
at Guise were compelled to leave, the houses were plundered, 
and the town of Guise and the Familistere were left a chaos 
of rubbish. 

In January, 1920, at the Godin establishment 600 
workers were repairing damages, putting in machinery and 
manufacturing the first products. The first melting of iron 
since 1916 came out of the furnace on August 16, 1919. The 
losses of every kind, houses, machinery, models, raw mate- 
rial, finished products, were valued at 12,600,000 francs. 
The State, by an advance of about 5,000,000 francs, has 
made it possible to start up the works again. There was still 
a lack of coal, pig iron, coke, transportation, etc. In spite 
of all this the re-establishment of the Familistere seems a 
certainty. Europe had no industrial community more beau- 
tiful or better illustrative of the possibilities of a just co- 
operation of "capital and labor." 

* 

The Blanzy Coal Company is considered by working class 
representatives in France to be a good example of profit shar- 
ing. Before establishing its plan the company had set up 
interesting welfare institutions, meeting the costs of heating y 
of medicines and giving other financial advantages, which in 
1917 reached a sum of 1,500,000 francs for the total of the 
employees. Since 1915 the board of directors have given 
100,000 francs in government bonds for the benefit of a 
special service to assist large families in the task of educating 
their children. It has also helped to put in operation co- 
operative societies. The profit sharing fund is the surplus 
after a dividend of 50 francs on shares of 500 francs has 
been paid. In 1918, the profits paid the employees amounted 
to 3,900,000 francs. The mines of the Blanzy Company dur- 
ing the war were requisitioned and controlled by the govern- 
ment. 



386 THE NATIONAL CIVIC FEDERATION 

The firm of Chaix, printers to railroad companies, started 
profit sharing in 1872, the employees then numbering 500, 
but of recent years averaging about 1,200. In the earlier 
years, of the annual bonus of 15% of wages, one-third was 
paid in cash, one-third retained for the pension fund and 
one-third held on account to be drawn by an employee when 
his connection with the firm should cease. But since 1895 
the entire bonus has gone to the establishment's old age pen- 
sion fund. Employees during their apprenticeship may con- 
tribute to this old age fund, a fact illustrative of the conti- 
nuity of employment expected in large factories in France. 
The pension may begin at age 55. Chaix has long had a shop 
council consisting of the heads of all the departments, with 
Mr. Chaix as president; it discusses matters of interest in the 
work of the firm and the welfare of the employees. 

Michelin & Co., rubber tire makers at Clermont-Ferrand, 
employing 1,200 persons, have built 500 houses for their 
employees and established a large co-operative society and 
several benefit funds. M. Michelin retains authority over 
all decisions and the right to discontinue the profit sharing at 
any time. The employee receives one-fourth of his profit in 
cash, the balance remaining with the firm at 5% interest. 

■ 

Muller Roger & Co., brass founders, employing 400 
people in Paris and 300 at Noyon, apportion three parts of 
a profit sharing unit to men of over 12 years' service, two 
parts for six years and one part for three years, but the money 
remains with the firm until the workman has completed 30 
years of service or attained age 60. The pension may rise 
to $2.50 per week. 

Piat's manufacturing works at Soissons have as funds: 
Medical aid, sick allowances, maternity allowance, building 
society, co-operative store, old age pensions, classes for ap- 
prentices, dining-rooms at works, baths, gymnasium, etc., and 
benefits for wives and daughters of employees. A bonus of 
5% annually is given on wages, half in cash and half going 
to an old age fund. This pension also may reach $2.50 per 
week. 



PROFIT SHARING REPORT 387 

Dollfus-Mieg & Co., thread manufacturers at Le Cateau, 
Mulhouse and elsewhere, 5,000 hands, set aside a large sum 
for profit sharing annually. 

The Five-Lille Manufacturing Company, 4,000 employees, 
shares 8% of the net profits in proportion to wages, the com- 
pany keeping the bonus at 4% for 15 years before paying it 
in cash. 

The large department stores of Paris usually pay a bonus 
which goes into pension or other benefit funds. M. Chauchard, 
founder of the Louvre, left 3,000,000 francs for the benefit 
funds of his establishment. The Galeries Lafayette puts 
aside 5% of an employee's salary every month, the employee 
leaving before five years drawing out merely his own pay- 
ments with interest, though after five years the whole amount 
standing to his account goes to him. La Samaritaine divides 
half its net profits among the employees of over seven years' 
service. An annual bonus is given those having lesi than 
seven years. 

The Bon Marche, the largest department store in the 
country, in its profit sharing and benevolent methods is far 
advanced beyond any other company of any kind in France. 
Its printed "Souvenir," as presented to its foreign customers 
year by year, has the following: "M. Boucicaut (Aristide,, 
the founder) adopted the policy of seconding his own efforts 
by a superior staff of employees chosen with great care, gov- 
erned paternally and supervised by a just directorate, which, 
basing advancement upon services rendered, allowed to each 
assistant the opportunity to obtain promotion to the most im- 
portant position." ,4 The constitution of the house as estab- 
lished in 1880 by Mme. Boucicaut has allowed a large num- 
ber of those employed to become shareholders in the under- 
taking." "A provident fund founded by M. Boucicaut and a 
retiring fund founded by Mme. Boucicaut furnished for all 
employees a provision against the ills of old age." 

At the close of its forty-third year, August 1, 1918, the 
number of employees participating in the provident fund was 
4,138, and the amount in the treasury 6,055,876 francs. 
More than 7,000,000 francs have been paid participants. 



388 THE NATIONAL CIVIC FEDERATION 

There are about 1,000 old employees on pension. Among 
the Boucicaut funds is one for a mutual aid sickness society, 
one for assistance to widows and orphans and a maternity 
fund for employees' wives and infants. The capital of the 
Bon Marche, not including reserve, originally divided into 
400 shares, and now 128,000, brings each share to be worth 
about 2,000 francs. In the fiscal year 1918-1919 the business 
amounted to 265,000,000 francs, the net profits to more than 
14,000,000 francs, and for dividend on each share 100 
francs. 

The educational and welfare features of the establish- 
ment are notable. At evening classes are taught, free, among 
other studies, fencing, instrumental music, and English, prize 
winners of the language class being sent to London for a stay 
of several months. Young women employees are lodged in 
a building belonging to the company. All employees are 
given free the midday meal — meat, vegetables, dessert and a 
bottle of wine or beer. Certain employees are also given the 
evening dinner. 

Yet, notwithstanding the efforts of the Bon Marche to in- 
sure a happy family in its establishment, nearly all its em- 
ployees were on strike several weeks, October-November, 
1919. It had been caught in the flood of the nation-wide 
labor uprising after the war, as had previously been the body 
of bank clerks of Paris, the cafe waiters, the teachers, and 
even the host of municipal clerks. Riotous scenes were 
enacted in the city square facing the big store, windows were 
broken and persons injured. Excited mass meetings took 
place daily. All over, peace attained through the government 
labor department conciliators, the managers took the upper 
hand, enforced their rules and discharged more than a hun- 
dred of the more active strikers. 

The Ford Company, with at present 100 employees in 
Paris and 300 in its new factory at Bordeaux, in 1914 intro- 
duced in France its miscalled "profit sharing" methods. 
March 30, 1918, 23.7 of its French force were on its wage- 
bonus list, after six months of service, the percentage increas- 
ing to 37.5 March 30, 1919, with a smaller number of em- 
ployees, due to slack work. The labor turnover of the com- 
pany was reported as 100%. The rank and file employees 



PROFIT SHARING REPORT 389 

are paid by the hour and may leave or be discharged at any 
moment, but heads of departments, who are on monthly sal- 
ary, are required to give or take 14 days' notice before leav- 
ing. The bonus beyond regular wages, thirty-hundredths of 
a franc an hour, does not vary according to the profits of the 
company. 

Edward Deason, in contributing some observations on the 
outcome of the Ford supplementary wage payments and pater- 
nal supervision of employees in France, remarks that his 
views have been arrived at after an experience of three years 
there with the system. He says that the cast-iron rules found 
to be workable with the many nationalities that go to make 
up the cosmopolitan crowd of work people in the Detroit 
Ford factory are totally unsuited to the customary working 
conditions and the racial mentality of the French workmen. 
"In a word, the Ford system is not appreciated here. It is 
in fact disliked. Instead of the 40 hours per week, for ex- 
ample, which they have to work at the Ford factory, men are 
continually leaving for other places at the same rate of pay 
but with 50 or 60 hours per week of work. The French work- 
man is so used to a long day that he prefers it. Leaving the 
Ford place at 3:45 in the afternoon, he doesn't know what to 
do with himself . None of his comrades are at the cafe. No 
place can let him have a dinner for the next two or three 
hours. And he misses his solid midday meal. The Ford 
Company tells him to bring a snack in his pocket and cease 
work for half an hour at midday to eat it. This, of course, 
is a flagrant breach of the French factories acts and is com- 
pletely subversive of all French customs. The French people 
will perhaps change some of their habits, but they will not 
do so at the bidding of the Ford Company. 

"The company expects a man to do something in the way 
of insurance, which is quite common and easy in England or 
America, but it is practically impossible in France. What is 
known as industrial insurance is quite unknown here. The 
factory sick club is also rare. A sick man or woman is taken 
off to the hospital for even very slight complaints. More often 
than not when any kind of trouble falls upon the family there 
is hardly a week's pay available. The tendency is for the 
men to spend up all they have. The laboring class is not 
sufficiently educated to understand how to provide for the 



390 THE NATIONAL CIVIC FEDERATION 

rainy Whenever Sims ta Lke in ban i e welfare : their 

employees, thai - rt of thing is done for them. 

"The F plan is to give the man the money sc that he 
mav buv foi himself the mm it :;::ies and comforts suited to 
his particular needs. Nice in theory, but i: doesn't work >ut 
in practice. ... I never found an employee ap- 

preciated the 'investigation 5 :: his home conditions, ef To 
the intelligent v-orkman the system seemed to have been 
planned to 'rescue the fallen 5 and to take it : :: granted that 
all workmen were in that category. Oi :ourse. the investiga- 
tor is expected to smooth out that misunderstanding. The 
man considers that he gives his services for a rewaz L and if 
the employer likes : _ further and give him a share of the 
profits he will appre :ate it. But as tc what he doe- with the- 
extra money and how he behaves toward bis lamily. he will 
tell yon that in France the 'employers don't interfere with 
such matters.' 

"Many of the : nms of insurance, and such public insti- 
tutions as libraries, features s: pi vninent in the life of an 
American or an English city, are either non-existent : r rat oF 
the reach o: the French workman, and :o give him the moneys 
tc buy such advantages is as useful as raving him a dollar to 
buy soda-water in the Sahara Desert. 

"So long as a firm like the Ford Company rays exception- 
ally high wages : :r the unskilled labor which it utilizes, there 
is little feai :: labor trouble.' 3 

Mr. Deason says that something like profit sharing in 
France might be carried on successfully "on these lines"' 
(which, as neither stock nor cash dividends are mentioned, 
can hardly be recognized, under even a loose deinit:::;. as 
"profit sharing lines" | : 

1. Assisting the wage-worker in case of sickness. 

2. Providing expenses in case of death in his family. 

3. Covering him and his zamilv in some form of block 
insurance. 

4. Providing him with an aimual holiday without loss 
:: pay. 

5. Establishing a savings bank. 

6. Providing for an :id age pension — additional to the 
usual government pension. 



PROFIT SHARING REPORT 391 

At a Congress at Bordeaux in 1912, M. Paul Delombre, 
President of the French Profit Sharing Society (and formerly 
Minister of Commerce, and Minister of the Post and Tele- 
graph Service), explained concisely the French idea for the 
betterment of relations between workmen and their employees 
i>y means of profit sharing: 

"It must be a supplement to the salary and yet not 
encroach on it, the normal salary being the basis upon 
which the share of profits should be calculated. Profit 
sharing is not in any way a liberality on the employers' 
part. It is an exchange for services. It creates a closer 
feeling between employers and their workpeople, who 
become as it were sharers in the prosperity of the business. 
The feeling of responsibility makes for peace in the work- 
shop. And of all the methods so far tried for preventing 
difficulties and strikes, profit sharing and the improvement 
of the social condition of the workers have been found the 
most effective." 



392 THE NATIONAL CIVIC FEDERATION 



EXPERIENCE IN ENGLAND. 

While in England there are over 12,000,000 persons 
engaged in gainful occupations in which profit sharing in 
some form may be possible, the "Report on Profit Sharing 
and Labor Co-partnership in the United Kingdom," issued by 
the British Board of Trade in 1912, giving the history of every 
attempt at profit sharing in England from 1829 to 1913, 
stated that the net result in that period was that 299 plans 
were put into operation. Of these, 163 had ceased to exist 
when the report was published. The remaining 133 employed 
106,189 persons, of whom a large number were in the em- 
ploy of public utilities, 28,246 being employed by gas com- 
panies. 

The best known case of British profit sharing, frequently 
described as an example of all the possibilities in the system, 
is that of the South Metropolitan Gas Company, London. It 
was after the sliding scale system for the price of gas was 
authorized by the government, to harmonize the interests of 
the consumer and the shareholder, that Sir George Livesey, 
chairman of the South Metropolitan directors, in 1889, intro- 
duced profit sharing in the company. According to the com- 
pany's scale at that time, when gas cost 3s. Id. per 1,000 
cubic feet, the shares could receive 4% interest, and for every 
Id. that the price of gas was reduced the rate of interest could 
rise by 2s. 8d. per £100. The company thereupon arranged 
that for every fall of Is. in the price below 3s. Id. a dividend 
on wages should be paid of %.%. If gas cost 2s. 7d. capi- 
tal might have 4.8% and labor 4%%. While there has been 
no deviation from the principle in the sharing of the profits, 
there have been changes in the proportions favorable to the 
workmen. In 1910, a requirement was made by the company 
that the entire dividend going to an employee should be left 
in the company's hands to accumulate at interest or to be in- 
vested through the trustees in the company's stock. Pre- 
viously, one-half of an employee's share was withheld and 
invested in the stock, while the other half might be withdrawn 
on a week's notice. 



PROFIT SHARING REPORT 393 

Practically all the employees of the company, whether 
permanent or winter workers, are now profit sharers. They 
sign agreements to work for the company for six or twelve 
months, and- the company guarantees them employment for 
the same period, during which wages are not to be lowered. 
Usually a worker may leave the company for any ordinary 
reason, such as to take up better paid work elsewhere, in 
which case he may sell his stock to the company. For the 
ten years before the war, labor's average profit, in shares, 
was 8.2%, or four weeks' wages. Of the company's 
£9,250,000 capital, the employees hold shares representing 
more than £400,000. 

The introduction of profit sharing in the company's plant 
met the obstacle of a strike by the gas-workers' union, but in 
the 30 years of its practice of the system since the company 
has had no dispute with any of the unions. Its ban on union 
gas-workers was removed in a year or two after the strike, and 
from the first it held the works open for union bricklayers, 
carpenters and other skilled workers. 

A usual comment on the success of profit sharing by the 
Metropolitan company, and other gas companies which have 
since adopted the principle, is that the way to profits is usually 
sure in undertakings which have a monopoly in the stable 
supply of an essential to a community at a rate having slight 
variation in price. In such case the profits going to the em- 
ployees represent the outcome of both team and individual 
efficiency. In the elements of the efficiency, many points 
count for good — the workers' regular employment, habits of 
steadiness, improving skill, watchfulness for economy, the 
qualities of thrift applied generally throughout the works. 

Other types of British methods in profit sharing are seen 
in the following: 

The plan most heard of in America, aside from those con- 
nected with gas-works, is that of Lever Brothers, Ltd., soap 
manufacturers, Port Sunlight, near Liverpool. The firm calls 
their method a "co-partnership" trust. Partnership certifi- 
cates, of a total value of £1,000,000, may be allotted to those 
of the employees considered desirable partners who are 22 
years of age and have been with the firm four years. Begin- 
ning in 1909, the issue of these partnership certificates 



394 THE NATIONAL CIVIC FEDERATION 

amounted January 1, 1918, to £751,536, the "employee 
partners" of the firm's associated companies numbering 5,066. 
In the nine completed years of the co-partnership there had 
been distributed to employees, in co-partnership dividends 
and "prosperity sharing," £487,353. 

Certificates are issued to employees in proportion to wages 
or salary each year. The allotment is based on value of 
service. The "slacker and ne'er-do-well" receives nil, the 
"apathetic" from 5 to 10%, and the enthusiastic, apprecia- 
tive and responsive above 10%, with special allotment for 
unusual services or helpful suggestions. For certificate dis- 
tribution the working staff is divided into classes — directors 
and managers, foremen, salesmen and general staff. Co -part- 
ners receive certificates each year until a maximum holding 
is reached, which ranges from £200 to £3,000, according to 
annual earnings. Dividends are paid in 5% "cumulative 
'A' preferred ordinary shares," which the holder can sell at 
any time for cash at par value. "Co-partnership couples up 
loss sharing with profit sharing. If a man has acquired co- 
partnership certificates and if profits should cease to be 
earned, he would suffer equally with capital in loss of the 
dividends." The granting of certificates does not in any way 
interfere with the old age pensions of the firm. 

J., T. & J. Taylor, Ltd., woolen manufacturers, Batley, 
have 1,300 out of 1,900 workers as co-partners who own more 
than half the capital of the company. In their dual capacity 
as shareholders and profit sharers these co-partners draw over 
two-thirds of the profits of the company. In the 22 years 
1895-1916 over £180,000 was distributed to the workers 
under the plan of the firm. In 1897-8 there were no divi- 
dends. In the other years the "bonuses on wages given in 
the form of shares" ranged from 3% to 12^%. In 1915, 
however, 5% was in shares and 7^% in 5% exchequer 
bonds. By the plan 5% is paid as a first charge to capital 
and then for every 1% more that can be paid to capital 1% 
goes to dividends on wages. The holders of the bonus shares 
do not possess the right to vote at shareholders' meetings. 

Armstrong, Whitworth & Co., Ltd., conducting one of the 
largest foundries and iron manufacturing establishments in 



PROFIT SHARING REPORT 



395 



Europe, afford an example of profit sharing combined with 
investment in capital. Deposits may be made by the wage- 
workers of sums ranging from Is. to £1 up to a maximum of 
£200. Weekly deposits of £2 may be made by the office staff, 
mounting to £400. Deposits are guaranteed a first interest 
of 4%, but receive in addition a bonus, the total not to ex- 
ceed 10%. 

Clarke, Nicholls & Coombs, Ltd., "sweets manufacturers," 
London, have worked a profit sharing plan for 26 years, dis- 
tributing to its employees from £1,400 in 1890 to £12,000 
in 1915, the total being more than £218,000, or a yearly 
average on wages of about 13%. The profits accruing on the 
wages of employees working less than one year or failing to 
fulfill other necessary conditions of employment are carried 
to a provident or superannuation fund, which now stands at 
more than £40,000. In the busy season more than 3,000 
wage-workers are employed. The bonus is given in cash, but 
encouragement is held out to the work-people to acquire 
shares, in which their holding is considerable. 

E. S. & A. Robinson, Ltd., stationers and printers, Bristol, 
share profits with more than 1,700 employees. The divi- 
dends, in cash, run from two and one-half to three and three- 
quarter weeks' wages. Seven hundred of the workers have 

deposited £20,000 with the firm at a current interest of 4%. 

( 

Maypole Dairy Company introduced profit sharing nearly 
30 years ago and co-partnership 10 years ago. A part of each 
employee's share in increased profits is retained by the trus- 
tees for investment in the company shares. An employee 
receives his dividends while in the employ of the company, 
but should he leave he is paid half the value of his shares 
and the other half three years later, though the company may 
decide to give him the full value immediately. The company 
has more than 1,500 co-partner shareholders. 

An exceptional plan was announced by William Gray & 
Co., Ltd., shipbuilding, West Hartlepool, last year. The firm 
proposed setting aside 20% of its total profits for division 
among its workers, the amount to which each employee should 



396 THE NATIONAL CIVIC FEDERATION 

be entitled to be based upon his earnings, exclusive of over- 
time and on the period of employment and on not having lost 
more than 12 days' time in the year. The provision with 
regard to strikes states that time lost by reason of a general 
or district strike, whether authorized by trade unions or not, 
shall not be considered time wilfully lost. While there is no 
reference in the plan to breach of an agreement with em- 
ployers generally, it would therefore seem that the workmen 
may strike in defiance of their own unions and in breach of 
their agreements and still qualify and share in the profits. 

England has had examples of municipal profit sharing 
since 1900. The town of Stafford has a plan in connection 
with its municipally owned services of gas and electricity. 
In 1916, £1,066 was distributed to the gas employees, equal- 
ing 11.6% on the wages paid. In the electricity department 
the dividend reached 15% in 1915. Several other munici* 
palities give bonuses or otherwise supplement the pay of em- 
ployees. 

The co-partnership movement of Great Britain, a step 
beyond simple profit sharing, mainly affects gas companies 
and productive co-operative societies. In a memorandum 
submitted to the government's Reconstruction Committee, 
1917, the Labor Co-partnership Association thus justifies its 
title: "Our ideal (we do not suggest that it is immediately 
capable of full realization) is that every worker should be 
interested in the profits and should become a part owner of 
the capital." 

Among the gas companies, the leader in co-partnership 
has been the South Metropolitan. Its arrangements in 1889, 
as described above, for accumulating the workers' share of 
profits in the capital of the business were later extended to 
the admission to the board of directors of three of the em- 
ployees, elected by the entire force of workers, and the recog- 
nition of a committee of 54 employees who should look after 
the men's interests, arrange for a conciliation board, deal with 
social matters, inquire into accidents and take care of the 
provident fund. During the war this committee had charge 
of the pensions and allowances to the dependents of service 
men. In its entirety, this scheme of profit sharing and taking 
a gradually increasing ownership in the plant, together with 



PROFIT SHARING REPORT 397 

labor's representation in the board of directors and its control 
in works discipline and order, all with the purpose of satisfy- 
ing reasonable demands of the manual workers, is "labor co- 
partnership." 

Thiry-seven other British joint stock gas companies oper- 
ated in labor co-partnership follow the system of the South 
Metropolitan. The holdings of the 25,000 to 30,000 em- 
ployees of the 38 companies which in all are capitalized at 
over £55,000,000, are approximately £1,000,000, and the 
total of the profits employees have drawn amounts to 
£1,500,000. 

From co-operation to co-partnership has not proved a 
short and easy step. In Britain the term "co-operation," in 
its commercial sense, refers to a working-class movement 
having as its first purpose the absorption of the usual profits 
of dealers by organized buyers of commodities for personal 
consumption. A further move is the co-operative production 
of such commodities, usually carried out through combina- 
tion of the co-operative "distributive" organizations. There 
are also co-operative associations of workers. 

At the end of 1917 there were at work in the United King- 
dom 1,465 industrial co-operative societies, with an aggre- 
gate membership of 3,831,896; a total share, loan and re- 
serve capital of £81,770,273; a total trade (distributive and 
productive) of £272,746,849; and a total profit — before de- 
duction of interest on share capital — of £18,023,879. Com- 
pared with 1916 there was an increase in membership of 
268,127, or 7.5% ; in capital of £3,832,537, or 4.9% ; and 
in trade of £35,221,714, or 14.8%. The profit, on the other 
hand, showed a decrease of £934,509, or 4.9%. The total 
number of persons directly employed by the societies was 
156,945, and the total wages paid during the year amounted 
to £11,611,976, compared with 154,622 employees and £10,- 
391,245 in wages in 1916. 

While some of the societies are engaged only in distribu- 
tion and some only in production, others are engaged in both 
distributive and productive operations. Of the total 1,339 
retail societies, 132 employing 15,255 persons and paying 
wages amounting to £1,096,565 in their distributive depart- 
ments, allotted out of the profits a total of £43,425 to their 
employees as a bonus on wages, this being equal to 4%. 



398 THE NATIONAL CIVIC FEDERATION 

In 1917 there were 1,108 industrial co-operative societies 
of various types engaged in production, consisting of 985 
retail and two wholesale distributive societies having produc- 
tive departments, and of 121 associations for production 
only; these consisting of four corn-milling societies, 39 bread- 
making and other consumers' societies, and 78 associations 
of workers. The total number of persons employed by these 
societies was 56,169, the amount of wages paid during the 
year £4,567,288, and the value of productions £55,786,431. 
Of the 56,169 persons employed in production, 43.3% were 
men, 36.5% women, and 20.2% were young persons under 
18 years of age. 

A total profit of £908,887 was made upon industrial pro- 
duction by societies other than retail societies, the profits of 
the latter being merged in the general profit and therefore not 
separately ascertainable. Of this total £516,617 was made 
by the wholesale societies, £3,882 by the corn-milling socie- 
ties, £149,274 by breadmaking and other consumers' societies, 
and £239,114 by the associations of workers. 

Of the 1,108 societies engaged in industrial production, 
126, employing 10,432 persons in production, with wages 
amounting to £823,689, allotted a sum of £51,110 to these 
employees as a bonus on wages, this being equal to 6.2%. 
Of the total amount £10,162 was allotted by 81 retail dis- 
tributive societies, £7,533 by three consumers' productive 
societies, and £33,415 by 42 associations of workers. 

Sixty-nine of the 78 associations of workers for produc- 
tion, with sales amounting to £3,227,210, or 99.2% of the 
total sales of the associations at work in 1917, made returns 
showing the extent to which their employees and others shared 
in the membership, capital and management of the associa- 
tions. The returns showed that the total membership of the 
69 associations was 25,279, of whom 4,819, or 19.1%, con- 
sisted of employees; 15,884, or 62.8%, of other individuals; 
and 4,576, or 18.1%, of other societies. Of the 7,254 per- 
sons employed by the associations, 4,819, or 66.4%, were 
members of the associations employing them. 

The total number of directors or committeemen of the 
associations was 660, of whom 274, or 41.5%, were em- 
ployees of the associations; 255, or 38.6%, were other in- 



PROFIT SHARING REPORT 399 

dividual members; and 131, or 19.9%, were representatives 
of other (shareholding) societies. 

Among the productive co-partnership societies two of the 
largest are in ready-made clothing, the Kettering, with 957 
workers, and the Wellingborough, with 831. The Co-opera- 
tive Printing Society, with offices in London, Manchester and 
Newcastle, employing 454 wage-workers, for the half-year 
ending March 31, 1919, paid as bonus on wages £1,331, with 
a contribution to its employees' thrift fund of £347 ; a special 
grant to soldier employees of £331; one to the benevolent 
fund of £2,000 and allowances to employees in military serv- 
ice of £872. 

As the gas companies give their employees more than 
£60,000 a year in profit sharing, the total annual yield to the 
wage-workers by labor co-partnership reaches £110,000. The 
significance of radical laboring class co-operation linking up 
with the stockholders of monopolistic municipal utility com- 
panies is dwelt upon by idealist supporters of the joint move- 
ment. 

British Trade Union Opposition. 

In 1865 Henry Briggs' Son & Co., owners of the Whit- 
wood Collieries in Yorkshire, set up profit sharing with the 
avowed purpose of detaching their wage-workers from trade 
unionism. The plan, apparently successful for about eight 
years, the total bonuses on wages amounting to £40,000, 
broke down in 1873, when the workers went on strike against 
a wage reduction and the firm abandoned its profit sharing. 

Ten years ago the plans of Sir Christopher Furness for 
profit sharing attracted attention. He proposed the principle 
for the Wingate Collieries and also tried it for a year through 
the Irvin Shipbuilding and Drydock Company at the Hartle- 
pools. In a speech to the employees of the Wingate Collieries, 
in which he submitted the particulars of his proposed co-part- 
nership methods, he said: 

"1. While the board of directors will retain for the 
officials of the company full power to employ men as the 
circumstances of the moment may determine, the gen- 
eral conditions of working and payment accepted by the 
miners' union will be duly recognized. On the other 
hand, it is well that it should be understood from the 



400 THE NATIONAL CIVIC FEDERATION 

beginning that, in view of the advantages in which em- 
olovees engraved on the colliery will certainly share, as 
well as other benefits that may possibly accrue to them, 
our officials will be under strict injunctions to see that only 
men of capacity and industry, discreet conduct and sober 
habits, and regularity in hours, shall be retained in the 
service of the company. 

"2. Every employee — whatever his status if or accord- 
ing to my standards, laborers have rights equally with other 
members of the working class community! — every em- 
ployee. I say, becomes a member of the co-partnery by 
signifying assent to its principles, and by acquiescing in 
the regular deduction of 5^c from his pay until the shares 
to be allotted to him, and which he must apply for, are 
fully paid, thus enabling him to acquire his holding by 
gradual instalments: and no employee can continue in the 
service of the company for more than three months unless 
he becomes a co-partner. 

"3. The labor co-partners — who in other" respects will 
be as the workmen of other collieries in the county of 
Durham, not forgetting the legal rights conferred on em- 
ployees by the workmen's compensation act — will partici- 
pate to the extent of their share holdings in such profit 
as may from time to time be paid in dividends by the com- 
pany. Large and small shareholders alike will be placed 
on precisely the same footing. 

"4. The control of the company's affairs will be vested 
in the board of directors, and no one but the management 
will possess authority to discharge as well as to en°:a°;e 
workmen, with responsibility to the board alone. Along- 
side this form of administration, however, there will exist 
a colliery council, composed equally of representatives of 
the directors and representatives of the employees, which 
body shall become the repository of information of im- 
portance or interest that may be communicated without 
injury to the company's welfare, shall have power to inves- 
tigate and bring efforts of conciliation and persuasion to 
bear upon matters that may come into controversy be- 
tween employees and employers or their representatives, 
and shall be entitled, by majority vote, to make representa- 
tions and offer counsel to the board in matters directly 
relating to the working arrangements and conditions asso- 
ciated with the colliery. Furthermore, the representa- 
tives of the employees would possess the privilege of sum- 
moning to meetings of the council, whenever their advice 
was desired, the officials of their trades unions, who would 
be entitled to elicit information and to address the council 
on the subject occupying its attention. But these are points 
of detail which can be settled in conference subsequently, 



PROFIT SHARING REPORT 



401 



should you and your fellows resolve to co-operate in the 
execution of the scheme I am now propounding to you. 

"5. The above outlined arrangement, alike in its parts 
and in its entirety, is subject to the cardinal and supreme 
condition that in acquiescing in it the co-partners, while 
accepting the hours, wages and other conditions of labor 
actually secured generally by the employees' trades unions 
throughout the country, which shall govern this compact, 
agree to substitute, on the one part for that barbaric instru- 
ment the strike, and on the other part for the equally out- 
of-date instrument the lock-out, conciliation by the colliery 
council, or, this failing, arbitration by a court of repre- 
sentatives of employers and employees and presided over 
by the county court judge of the district or his nominee, 
the chairman of such court to be regarded in the last re- 
sort as final arbiter in all matters of dispute. 

"There, in substance, you possess the elements of the 
proposition I submit to you for your consideration, and I 
am not without hope that, in the end, you will concede 
that the conditions are reasonable and just, and well cal- 
culated to produce the results which we must all desire." 

The plan was submitted to the miners' union and rejected 
by them, and in advising Sir Christopher Furness of the action 
of the meeting the chairman wrote him: 

"In connection with our meeting on Tuesday, June 22, 
to consider your 'co-partnery scheme,' we had a repre- 
sentative from our executive council at Durham, and after 
careful consideration of the above they advised us to have 
nothing whatever to do with the same." 

This incident is of more than passing interest when it is 
considered in the light of the then existing friendly relations 
between Sir Christopher Furness and the labor interests. 
Some months previously he had devised and put into opera- 
tion a similar plan at the shipbuilding yards of the Hartle- 
pools company, with which he was identified. 

In that particular instance the co-partnership scheme had 
its genesis in the severe labor struggle in the shipbuilding 
industry on the northeast coast of England and on the Clyde 
in 1908. The proposal for the extension of the system to his 
coal mining industry did not have its origin in strife but 
rather in the fact that his experiment at the shipyards was 
proving to be an unqualified success. Notwithstanding the 
success of this scheme from the point of view of both the em- 



402 THE NATIONAL CIVIC FEDERATION 

ployer and the employees, the latter voted to discontinue the 
plan at the end of the year. 

This remarkable action on the part of the employees is 
thus explained by Ralph M. Easley: 

"A few years ago I spent a night at the home of Sir 
Christopher Furness, who had worked out a most compre- 
hensive and, to my mind, fair and sane scheme for profit- 
sharing. As most of the men in his shipbuilding yards be- 
longed to the unions, he started out by insisting that all 
the employees should belong to a union and he thought the 
union officers should be represented on the board of direc- 
tors of the shipbuilding plant where he was making the 
experiment. He had just completed the first year of the 
plan and was quite delighted with the outlook for its suc- 
cess. 

"The night before I went out to his place, however, 
I had been in the House of Commons and had there met 
twenty-five of the labor members of Parliament. Nearly 
all of these men had been guests of The National Civic 
Federation when Mr. Alfred Mosely brought them to the 
United States the year before, at which time we sent them 
all over the country. Included in the number was Mr. 
Barnes, the head of the Engineering Society. I told Mr. 
Barnes that I was going to see Sir Christopher Furness,. 
who had invited .me to visit him and talk over his profit 
sharing scheme, and I asked him what he thought of it. 
Mr. Barnes answered: 'There are eleven hundred of our 
men employed there and they are all for it; but I am 
against it.' I said, 'That's a remarkable situation. Why 
are you against it?' This was his reply, and I think it rep- 
resents in a nutshell the view of the entire organized labor 
world: 'If all the employers in England were as fair- 
minded and as decent as Sir Christopher Furness, there 
would be no use for the unions and we could afford to 
disband; but, unfortunately, all employers are not of his 
type and, if we should disband to-morrow, we should, under 
economic pressure, gradually drift back to where we were 
twenty-five years ago, or worse. Now, if we are to exist, 
we must have members and those members have to pay 
dues. If those members come to think that profit sharing 
is going to take care of them, then they are not going to 
r pay dues and the organization, as a result, would go out of 
business, and there you are.' 

"Now, however selfish some persons may consider that 
position, those of us who believe that the unions are per- 
forming a great service to society in helping to improve 
the conditions of the working man must face one of two 
alternatives. We must either accept the view that in fight- 



PROFIT SHARING REPORT 403 

ing for the life of the trade union they are doing a worthy 
thing and ought to be supported, or the view that it would 
be better for the wage-earning class, as a whole, to 'smash 
the unions' and take a chance on the generosity of the em- 
ployers to see that the wage-earner receives his full due. 

"A few months later the whole scheme of profit sharing 
in Sir Christopher Furness's shipbuilding yards came to 
an end, for the reason that Mr. Barnes had persuaded his 
men to decline to renew the agreement. 

"Those who would 'smash the unions' (and I do not 
mean that in an offensive way) must realize that organiza- 
tions of labor are increasing in strength and not decreas- 
ing." 



404 THE NATIONAL CIVIC FEDERATION 



PROFIT SHARING; TRADE UNIONISM; LABOR 

CO-PARTNERSHIP. 

J. W. Sullivan. 

[Mr. Sullivan is a member of the International Typo- 
graphical Union; general lecturer for the American Fed- 
eration of Labor; has followed closely the progress of 
co-operation for more than thirty years; was the only dele- 
gate from America at the second International Co-operative 
Congress in Paris in 1896; has a large collection of re- 
ports and other works relating to co-operation, profit shar- 
ing, and co-partnership; for many years, as an exchange 
editor, has kept abreast of the movement through reading 
the co-operative periodical publications; in the course of 
more than five years' residence in Europe has met the 
leaders in the co-operative and co-partnership movements 
of various countries; and in America has from time to time 
investigated numerous attempts at co-operation.] 

(1916) Profit sharing, as commonly used, is a mean- 
ingless term. It conveys no settled signification. It refers to 
no fixed and definite economic principle. 

As carried on, especially in America, so-called profit shar- 
ing methods have ranged from plans established by self-deny- 
ing philanthropists to plans put in force by selfish men 
actuated solely by avarice. Hence, in general, the methods 
have been irreconcilable with any uniform system ; they have 
not been reducible to a consistent classification. 

The various notions which pass under the term profit shar- 
ing have been put before the public by employers; they have 
rarely been the results of desires expressed by employees. 

The social design represented in profit sharing may be as 
far apart as autocracy and democracy; in practice it is gen- 
erally autocracy. The employer takes upon himself certain 
rights, duties and responsibilities similar to those that per- 
tained to the feudal lord. 

The motive varies. It has been simply the promotion of 
workshop efficiency; it has been advertising; it has been war 
on trade unionism; it has been good fellowship, personal and 



PROFIT SHARING REPORT 405 

direct; it has been uplift for the working classes, impersonal 
and remote. 

As the systems have varied in intention, so they are car- 
ried out in practice only to the point decided upon by the 
employer. In one case the employer pays from year to year 
to each of the various grades of his employees a predeter- 
mined share of the profits. In another case, the division is 
made among selected individuals, the amount changeable at 
the employer's will. Whatever the percentage, the inclusion 
or exclusion of variable items among the fixed charges affects 
the statement of profits. Difficulties in this respect are the 
amounts to be allotted to depreciation of plant, 'to the losses 
of unprofitable years, and to the expected regular return on 
the capital invested, usually a percentage much above current 
interest. 

When the aim is merely higher efficiency, profit sharing 
is but a distribution of gains accomplished through a more 
compact and better greased mechanism. It is but a bonus,, 
based on the sum of the wages drawn. It may be only an 
annual make-up of withheld wages. When the aim is not 
simply efficiency, the profits to be shared may possibly be a 
benevolent addition to wages. The test of value to the work- 
man in either case is whether the advances equal those ordi- 
narily obtained through trade unionism. 

In America a noteworthy fact has been the large number 
of experiments reported as profit sharing which have passed 
out of existence. Many of these ventures, viewed from sub- 
sequent developments, are to be seen as sordid publicity 
schemes. Twenty years ago — and before that, thirty to forty 
years ago — profit sharing as an economic betterment was the 
subject of much newspaper coddling, some houses in New 
York with buncombe profit sharing features courting exten- 
sive Sunday magazine fame. More than one champion in 
that frothy movement perished of impudent dishonesty. In 
some cases, it is true, the originators died, in others they 
ceased their connection with the concerns interested, and in 
others again new managers brought a reversion to the straight 
wages practice. Instability in the personal composition of 
management has militated against profit sharing taking a 
recognized place on a large scale as a permanent economic 
institution of social value. 



406 THE NATIONAL CIVIC FEDERATION 

Uncertainty is a disturbing factor in profit sharing — un- 
certainty as to whether there are to be profits from year to 
year, uncertainty as to what the profits actually may be in 
any one year, uncertainty on the part of the employees as to 
the employer revealing his true profits, uncertainty as to the 
settled proprietorship of the establishment. In these uncer- 
tainties, it is seen that the interests and expectations of a force 
of laborers are constant — the highest obtainable level in 
wages, hours and working conditions, — while the purposes 
of coming and going employers are variable, including selling 
out either at a sacrifice or a boom profit. 

In this unsettled profit sharing there usually can be no 
definite hand-in-hand partnership of labor and capital. The 
two interests work strictly apart, each in its accustomed 
sphere. Capital sees an opportunity, undertakes an enter- 
prise, buys site and plant, decides upon the scale of produc- 
tion, manages the workshops, watches the market, pushes 
sales, enlarges or diminishes the works, runs the risks — in all 
respects making the mistakes or supplying the strokes of 
talent that count in management. The industrial wage-work- 
ing employee, while supplying the essential factor of more 
or less skilled manipulation of matter resulting in concrete 
production, projects no effort into the field of plan, produc- 
tion, purchase and distribution. 

A manifest weakness in profit sharing is the legitimate 
disinclination of employers, especially small employers, to 
reveal the scale of their profits, probably to be made use of 
by competitors, money lenders and taxers of every descrip- 
tion. Low profits may at times show up an employer as a 
blunderer; high profits may induce the advent of unwelcome 
rivals. A showing of scant profits may affect him detrimen- 
tally with his bankers or injure the advantageous sale of his 
business. 

From the point of view of the wage-worker, the dubious 
points of paternal profit sharing are numerous. Of course, 
if the annual dividend comes simply in the form of cash with 
no string to it, the windfall may be unobjectionable. The two 
sides are quits. But the increase in pay to the fortunate ones 
— fortunate in case they already enjoy prevailing wages — is 
generally accompanied with intensified supervision, irritat- 
ing interference and a humiliating patriarchal domination. 



PROFIT SHARING REPORT 407 

Added thereto may be a discipline extending beyond the 
legitimate jurisdiction of the factory and the purely commer- 
cial relations usually existing between two sides of bargain 
makers. The first query on behalf of the wage-worker is the 
level of pay from which the profit sharing begins. All told, 
what is paid may be only a miserable substitute for standard 
wages. A scheme taking in only foremen and superinten- 
dents, each expected to make a record, results in sweatshop 
slave driving. Taking in an entire force, the purpose may 
be a general bribery to keep out of labor organizations. The 
avowed co-operation in profit sharing must be subject to proof 
in every case, but the straight wages system brings a suffi- 
ciently definite and satisfactory cohesion of capital and labor, 
with every man on each side knowing at all times just where 
he is. A mutual forced dependence may prove more irksome 
and less human than a mutual independence. 

As one effect of professed profit sharing, the wage-worker 
sees ramifications of pace making. Within the workshop the 
best awards go to the foreman most exacting and the workman 
most selfishly active. Piece-work, overtime, unfair allotment 
of tasks here become features of administration. Various 
occupations have their peculiar forms of pace making. A 
workman may be a pace maker as to speed and as to ingra- 
tiating subserviencies. The toadies and time-servers lead to 
degeneracy of manhood. Their reward is a preferment — the 
easy situation and the steady work. Straining for efficiency 
in a profit sharing establishment may become a species of 
pace making of the entire force, as against the organized men 
of a straight wages establishment. Scabbing may be practiced 
by institutions as well as by individuals. 

An unfulfilled promise of profit sharing is the benefit to 
employers from "loyalty." It is assumed that the steadiest 
and most tractable mechanics are the best paying hands. 
Wage-workers know that in numerous cases this is not the 
fact. Physical endowment, nervous force, an active intelli- 
gence, mechanical aptitude, excellence in expert work, a gen- 
eral knowledge of the trade — these qualities frequently char- 
acterize the workman who occasionally takes time for himself 
or goes off to fields afar. His nature is adventurous, unrest- 
ful, explosive. He is the first to go to war or to try out 
schemes of his own. He is a self-speeder, a live wire in a 



408 THE NATIONAL CIVIC FEDERATION 

gang, a disseminator of ideas helpful to an industry. He is 
the knowing commercial traveler in his occupation. On the 
other hand, the model "faithful old employee" not infre- 
quently is but a plausible "old soldier." The rule of not ad- 
mitting an employee to the profit sharing under several years 
of service is a discouragement to a considerable mass of 
valuable workmen. These will naturally earn their weekly 
pay and when inclined move on. About one-third of our 
manufacturing wage-workers are not regular hands, a pro- 
portion established as much by the restlessness of the workers 
as by fluctuations in the amount of work. Profit sharing takes 
little account of this important third. A statistical disclosure 
of the number of men quitting profit sharing establishments 
directly after annual dividend payday would tell enlightening 
tales regarding contentedness, the general level of wages, and 
the validity of loyalty when the wage-worker has at length 
the withheld wages of the year in his pocket. A statistical 
statement of the number of strikes against profit sharing 
employers might reveal truths both as to wages and "loyalty." 

Is the relationship between employer and employee under 
profit sharing so sweetly arid pleasantly ethical? Of a cer- 
tainty, reputed profit sharing employers have been open to 
the charges of pretense, hypocrisy and perversion of princi- 
ple. The employer assuming to share dividends may, through 
the laborer's increased effort, actually advance a step in skin- 
ning; the straining and anxiety of the laborer reaching for 
the prize dangling before his eyes may result in a greater 
prize going to his employer. Plainly, a hypocritical employer, 
posing as a model profit sharer, may be actuated by a thinly 
veiled cupidity. 

The inside facts must necessarily be a matter of study 
with the employees of each profit sharing establishment. They 
know, when the motive of the employer is "efficiency," that 
time may disclose persistent greed or perhaps a strenuous 
effort to make a precarious or parasitical venture pay; they 
know, when it is anti-trade unionism, that they themselves 
are awaiting a possible day of reckoning; they know, when it 
is vanity, how heartless and ridiculous is the employer. 

Trade unions, for good reasons founded on knocks, do 
not advocate profit sharing. They place the system under no 
total indiscriminate condemnation. They do know that the 



PROFIT SHARING REPORT 409 

idea is distinct from the union principle; their criticism may 
be disarmed if the profits paid are through decades supple- 
mentary to unionism. A major point with unionists is that 
profit sharing, as developed in sporadic examples, has had 
no effect in the elevation of the whole mass of the wage- 
workers. It has not been a part of the world-wide labor 
movement. Where practiced, it has in many ways narrowed 
the workman's social vision. He has seen no further than 
his own workshop; he has concentrated his mind on his own 
immediate well-being; he has not been encouraged to attend 
the assemblies, to take part in the discussions, to subscribe to 
the literature, to imbibe the spirit of labor organizations, all 
of which have led to independent working-class social and 
economic activities. The effects of the voluntary inclusive 
association of all the workers of his occupation have been 
beyond his mental horizon. 

The advances in welfare of the great body of our nation's 
industrial workers have come in the form of the shorter 
workday and the higher wage. Not until long after union 
achievement in this field have profit sharing employers had 
any noticeable part in preaching the eight-hour day, while the 
rates they have paid, plus the profits they have shared, have 
usually been surpassed by the advancing union scale. The 
propaganda by profit sharing employers of their principle in 
the various industrial nations during the last half century has 
not brought under its influence 5% of the wage-workers in 
any country; the propaganda by the trade unions of their 
principle has brought to them in the same period the mastery 
of the labor market in many industries in every country. 

Trade unionism aims to claim, as a right, from the nation's 
annual production what it believes to be labor's share. Profit 
sharing sees the master alloting an award, as he might to his 
servant. Even if it be conceded that the employer acts from 
the praiseworthy motive of generosity, or of fellowship, or 
of transforming an unjust to a just society, the case remains 
that of the strong condescending to aid the weak. 

The union spirit appeals to the vast majority of the wage- 
working classes for the reason that a labor organization 
initiates and backs up, both to employers and to society in 
general, proposals which embody the workers' aspirations. 
These contemplate economic conditions in the large, aim at 



410 THE NATIONAL CIVIC FEDERATION 

the control of labor's side in the sale of labor's power and 
seek social benefits beyond the bounds of any single industry. 
The union has an influence on general conditions, through 
education, agitation, legislation. It reaches out to protect the 
weak — the women and children — everywhere. No social re- 
form is beyond its purview. Compared with a broad survey 
of the functions and purposes and achievements of trade 
unionism, what profit sharing has actually done shrinks to 
pitifully petty dimensions. Granted its every claim, it has 
been an inconsiderable branch of assisted thrift, usually con- 
tingent in practice on the changeable will of a mutable power. 

To the sincere employer, desirous of improving the wel- 
fare of his employees, any project for profit sharing presents 
a difficult problem. In some exceptional establishments, such 
as gas-works, turning out regularly a single product with a 
certainty of its entire sale at a fixed price, profit sharing has 
now passed well into a satisfactory experimental stage, but 
the obstacles to benefiting the employees of all grades by 
profit sharing in occupations generally are obviously so 
numerous as to shut out an occasional successful method,, 
evolved in unusual circumstances, as a model for a system or 
as the triumph of a principle. 

On the whole, the outcome in the countries of our civil- 
ization in which profit sharing has been preached for seventy 
years, arid been the subject of an amount of favorable com- 
ment enormously disproportionate to its results, employers 
may be well advised before taking up with it to study in fair- 
ness the aims and efforts of trade unionism as a world-wide 
movement. The moral and commercial atmosphere is cleared 
when the employer pays prevailing wages for trade union 
hours, maintains good working conditions in his establish- 
ment, and recognizes that in the labor market he is inevitably 
on one side, that of the buyers, while the employees are just 
as surely on the other, that of the sellers. The correct rela- 
tions of employer and employee may in these circumstances 
become fair play, mutual respect, recognition of reciprocal 
rights and duties, the whole leavened with average honesty,, 
good nature, and kindred sentiments of humanity. Acting 
with a wisdom founded on experience, the two sides thu9 set 
up what is tantamount to a practical and paying co-operation. 
In the standard literature relating to profit sharing in leading 






PROFIT SHARING REPORT 411 

countries the well defined and unmistakably just point of de- 
parture toward idealistic aims is recognized as being from 
conditions established by the trade union. 

Labor co-partnership begins at this stage. In theory a 
transformation from capitalistic enterprise to the association 
oft capital and labor in mutual effort, it usually begins in 
practice as an extension from genuine profit sharing, "enab- 
ling the worker to accumulate his share of profit in the capital 
of the business employing him, thus gaining the rights and 
responsibilities of a shareholder." A further step is provi- 
sion "for a direct share in the management as well as in the 
profits." A leading British writer on labor co-partnership 
says that the best safeguard of wages "is the free play of 
trade union principles, and any firm which refuses to recog- 
nize the conditions generally observed in the trade puts itself 
out of court as a profit sharer." Another writes, "I am going 
to repudiate the idea that co-partnership is a substitute for, 
or in any way is antagonistic to, trade unionism." 'You 
cannot say you have given the worker a profit unless he has 
first had the standard wages for his service. Co-partnership, 
therefore, assumes a standard wage. The standard wage 
again assumes organization to maintain it and to raise it. It 
assumes the existence of trade unions, collective bargaining, 
and the meeting of capital and labor upon equal terms." 

In Great Britain the labor co-partnership movement stands 
entirely apart from the establishments that profess only profit 
sharing. Its principles are promoted by an educational, 
advisory and propagandist organization. This body works 
by means of lectures, conferences, literature and correspond- 
ence. It has a monthly organ. It drafts plans to meet the 
special conditions of each business, gives legal advice bearing 
on co-partnership and cognate subjects, drafts rules to meet 
the special conditions of each experiment, and has represen- 
tatives to explain the principles to groups of employers and 
employees. 

Excepting 36 gas companies, the British Labor Co-part- 
nership Association is made up of businesses established 
(with two or three exceptions) by workingmen. Of these, 
there are 110, with a capital of nearly $10,000,000, having 
an annual trade of more than $20,000,000 and a dividend 
on wages of $150,000. In the gas works more than 22,000 



412 THE NATIONAL CIVIC FEDERATION 

employees are under agreement for profit sharing or co- 
partnership and the market value of their shares and deposits 
is $3,350,000. 

In commenting on these facts, a vice-president of the 
association says: "I ought perhaps to emphasize the distinc- 
tion between co-partnership and profit sharing. The latter is 
a necessary element in the former, but only one of two, the 
other being capital-owning. Where a capitalist pays his 
workers a share of the profit they help to produce, that may 
be an excellent thing, according to the object sought by it and 
the system on which it is done ; but many regard facilities for 
capital-owning by the employee in addition to participation 
in profits as being essential to co-partnership." 

"Owning collectively the tools they use," says a writer 
on co-partnership, "the workers gain the sense and dignity of 
possession." "Possession has a strong educative influence; 
it lifts and elevates the mind of the employee, gives him a 
new interest in life and broadens his outlook on public affairs, 
strengthens his grit and character, and makes him a better 
citizen." The same writer says that the establishment of co- 
partnership societies has been followed in a short time by a 
rise of wages in the particular trade involved, by the em- 
ployees taking prominent positions among trade unionists, 
and by conditions generally in the trade being improved. 

Some observers have seen something of a parallel in co- 
partnership and syndicalism. But the movements are distinct, 
both in means and finalities. Co-partnership aims to absorb 
what share of industry it can through peaceful and legal 
measures — contract, compensation, step-by-step education of 
labor in business and co-operative methods. It but seizes 
legitimate opportunity to place laborers with their own capi- 
tal in the position now occupied by capitalists and laborers. 
The mere statement of the facts in this form separates the 
movement from syndicalism, which forbids contracts with 
employers, plans to master industries through the general 
strike, and then establish independent communist systems 
within an anarchistic society. 

To the query why co-partnership, with its manifest social 
advantages, has not already become a great world-wide move- 
ment, the answer must lie in the shortcomings of human nature 
as at present developed. They form an almost insuperable 



PROFIT SHARING REPORT 413 

obstacle to all transforming social movements. Taken as a 
whole, the employing class is selfish; taken as a whole, the 
employed class is incapable — financially, technically, co- 
operatively. 

The reader now has a sketch of the case for profit sharing 
and of that for co-partnership, regard for the interests of 
trade unionism being interwoven with each. Attempt has been 
made in this brief statement to outline the general movement 
toward voluntary participation, not only of profits but in 
business enterprise itself, to indicate the outcome of experi- 
ments sincere or otherwise, to tell the employer his most 
direct way toward making the employee really his partner, 
and to give the employee the information he needs in a study 
of a transformation of capital vs. labor into capital owned by 
labor, a change in which all his rights as man and unionist 
can be fully protected. 



414 INDEX 



INDEX. 



PAGE 

Abandoned Plans 310 

Acme Sucker Rod Company, see S. M. Jones Company. 

Advance Pump and Compressor Company 74 

Alexander Hamilton Institute 75 

Allen Manufacturing Co., W. D 75 

Aluminum Goods Manufacturing Co 76 

American Appraisal Company, The 77 

American Blower Company 78 

American Electric Railway Ass'n 357 

American Light and Traction Co 24 

American Locomotive Company 188 

American Manufacturing Concern 27 

American Rolling Mill Co 27 

American Smelting and Refining Co 79, 310 

American Sugar Refining Company 198 

American Telephone and Telegraph Co 199 

Anchor Post Iron Works 80 

Apperson Brothers Automobile Co 306 

Armstrong, Whitworth & Co., Ltd 394 

Art in Buttons 82 

Ashland Fire Brick Company 266 

Atherton Furniture Company 82 

Atkins & Company, E. C 311 

Atlas Powder Company 199 

Atlas Underwear Co 82 

Avery & Sons, B. F 313 

Baker Manufacturing Co 202 

Baker & Company Walter, Ltd 83 

Baldwin Locomotive Works 314 

Ballard & Ballard Co 30 

Barcalo Manufacturing Co 32 

Bartley, R. A 32 

Bay State Milling Co 84 

Beech-Nut Packing Co 85 

Belle City Malleable Iron Co 203 

Bemis Brother Bag Company 85 

Benoit System 33 

Berry, George L 379 



INDEX 415 

PAGE 

Best & Company 89 

Big Industries 359 

Black Company, The H 189 

Blanzy Coal Company 385 

Boardwalk National Bank 89 

Bon Marche 387 

Bossemeyer Brothers 89 

Boston Consolidated Gas Company 33 

Boston Elevated Railway Company 315 

Boston Herald 315 

Botany Worsted Mills 90 

Bourne Mills 39 

Bowser Tank and Pump Works 90 

Bradley Knitting Co 91 

Brewster & Company 315 

Bridgeman-Russell Company 307 

Bridgeport Brass Company 92 

British Columbia Electric Railway Co., Ltd 317 

British Trade Union Opposition 399 

Broadalbin Knitting Company 93 

Broderick & Bascom Rope Co 345 

Building Trades 352 

Builders' Iron Foundry 205 

Burritt Company, A. W 268 

Butler Brothers 318 

By-Products Coke Corporation 93 

Cabot, Samuel, Inc 94 

Cadillac Handle Company 94 

Canada Cement Company, Ltd 207 

Canadian Cottons, Ltd 41 

Casey Company, John A 346 

Caswell-Runyan Company 95 

Chaix, printers 386 

Champion Spark Plug Co 319 

Childs . 96 

Citizens' Trust Company 189 

Clark Equipment Company 271 

Clarke, Nicholls & Coombs, Ltd 395 

Cleveland Twist Drill Co . 96 

Cleveland Worsted Mills Co 208 

Clipper Belt Lacer Co 98 

Cobbs & Mitchell, Inc 99 

Columbia Railway, Gas and Electric Co 272 

Columbia Trust Company 100 

Columbus Railway, Power and Light Co 319 

Commonwealth Edison Company 208 

Commonwealth Power, Railway and Light Co 210 

Consolidated Gas Co. of New Jersey 190 

Consumers' Company 100 



416 INDEX 

PAGE 

Conway, H. J 377 

Craddock-Terry Company 272 

Crane Company 101 

Crane Valve Company 102 

Crocker, Burbank & Company 102 

Crossett, Edward C 103 

Crump Label Company 320 

Cunninghams and Co., Ltd 320 

Curtis, Towle & Paine Co 191 

Cushman-Hollis Co 320 

Daily Sentinel 306 

Davis, Dorland & Company 307 

Definition of Profit Sharing 22 

DeLaval Separator Co 211 

Dempster Mills Manufacturing Co 104 

Demuth & Company, William 305 

Dennison Manufacturing Co 274 

Detroit Lubricator Company 104 

Delvin Manufacturing Co., Inc., Thomas 212 

Dewey Portland Cement Co 276 

Diamond Chain and Manufacturing Co 105 

Diamond Match Company 106 

Diamond State Fibre Co 106 

Dietzgen Eugene Co 277 

Dix & Sons Co., Henry 321 

Doherty Silk Company, Henry 107 

Dold Company 107 

Dolge & Company, C. B 278 

Dollf us-Mieg & Company 387 

Donnelly, Thomas J 380 

Dort Car Company 213 

Drayer, Walter W 379 

Driver-Harris Wire Co 321 

Duncan, James 371 

Du Pont de Nemours Company 214 

Dutchess Bleachery, Inc 307 

Easley, Ralph M. 

Wage-earners' Stock Investments 366 

Co-Partnership 402 

Eastern Shore of Virginia Produce Exchange 346 

Eastman Kodak Company 42 

Eddystone Manufacturing Co 109 

Edison Electric Illuminating Co. of Brooklyn 44 

Edison, Thomas A., Laboratory 280 

Electrical Railway Undertakings 357 

Eliot, Charles W. 

"Road toward Industrial Peace" 362 

Elk Fire Brick Company 282 

Elman Company, Samuel \ . . . 216 



INDEX 417 

PAGE 

Emery and Marshall Co 321 

Emil-Olcovich Companies 308 

Empire Trust Company 45 

Emporia Bank 305 

Endicott Johnson Corporation 46 

England, Experience in 392 

Ensley Bank 305 

Erie City Iron Works 322 

Exceptional Plans 266 

Experience in England 392 

Familistere de Guise 384 

Farr Alpaca Company 47 

Federal Trust Company 305 

Fels & Company 109 

Ferguson Collar Company, C. W 306 

Ferracute Machine Co 110 

First National Bank of Chicago 216 

First National Bank of St. Paul 305 

First National Bank of San Francisco 305 

Fischer, Jacob . 377 

Fitzpatrick, John 381 

Five-Lille Mfg. Company 387 

Follansbee Brothers Company 191 

Ford Motor Company 283 

Ford Company, Paris 388 

Fourth National Bank, Atlanta, Ga 305 

Fox Machine Company 322 

Frayne, Hugh 373 

French Types 382 

Frey, John P 371 

Frost Gear and Forge Company Ill 

Fulton Bag and Cotton Mills 323 

Furness, Sir Christopher 399 

Furniture Company, A 48 

Furst-McNess Company 306 

Furuseth, Andrew J 380 

Galeries Lafayette 387 

Gardner News Company Ill 

Garfield Worsted Mills 194 

Garner Print Works and Bleachery 112 

Garrett, C. W 356 

General Asphalt Company 48 

General Chemical Co 113 

General Electric Company 114 

General Fireproofing Co., The 118 

General Ice Delivery Co 49 

General Motors Corporation 217 

Ginsburg & Bros., I., International Dress Co 307 

Glatfelter Company, P. H 323 



418 INDEX 

PAGE 

Globe Tobacco Co 118 

Godin, Andre 384 

Golden, John 372 

Gompers, Samuel 368 

Goodrich Company, B. F 118 

Goodyear Tire and Rubber Co 218 

Grand Rapids Refrigerating Co 292 

Grand Rapids Veneer Works 194 

Gray, William, & Company, Ltd 395 

Great Northern Railway Co 219 

Great Western Sugar Co 119 

Greene, Arthur M., Jr 357 

Green, William 380 

Greenfield Tap & Die Corporation 293 

Guaranty Trust Company of New York 50 

Gurney Ball Bearing Company 119 

Guthrie Company, E 324 

Hager & Brother 120 

Haines, Jones & Cadbury Company 121 

Hall Company, C. F . 324 

Hammond Typewriter Company 195 

Harsh and Chapline Shoe Company 220 

Hart Schaffner and Marx 221 

Hawthorne Furniture Shops 122 

Heebner & Sons ' 325 

Hendrick Manufacturing Co 122 

Hercules Powder Co 123 

Hershey Chocolate Co 326 

Hibbard, Spencer, Bartlett & Co 124 

Hilton, W. P 293 

Hinde and Dauch Paper Co 295 

Hoffman & Billings Mfg. Co. 326 

Hohlfeld Manufacturing Co 307 

Holland, James P 379 

Holsum Bakery 307 

Home Furniture Company 125 

Hood and Sons, H. P 221 

Hotel Vendome 125 

Houghton Mifflin Company 51 

Hub, The 52 

Hunt Pen Company, C. Howard 327 

Huron Milling Company 327 

Huyck & Sons, F. C 307 

Hydraulic Pressed Steel Company 222 

Illinois Central Railroad Co 222 

"Industrial Democracy" 360 

Inland Steel Company 126 

International Harvester Co 223 

International Motor Co 127 



INDEX 419 

PAGE 

International Nickel Co 227 

Jeffrey Manufacturing Company ^ 356 

Jobbers Overall Company 127 

Johnston, William H 373 

Jones Company, S. M 329 

Kayser and Co., Julius, 228 

Kelly-Springfield Tire Co 228 

Keystone Driller Company 53 

King Motor Car Company 127 

Kirkendall & Company, F. P 229 

Kohler Company 128 

Korsmeyer Company 129 

Kutztown Foundry and Machine Co. 54 

Lake Erie Bolt and Nut Co 329 

Larger, B. A 380 

Larkin Company 129 

Lawrenceburg Roller Mills Co 130 

Leclaire, Edme-Jean 383 

Lesan Advertising Agency, Inc., H. E 330 

Lever Brothers, Ltd 230, 393 

Lichtner, W. 354 

Lilly Carriage Co 132 

Lobdell, George G. 356 

Locomobile Company of America 331 

Louisville Varnish Company 132 

Lowe Brothers Co 133 

Lowney Company, Walter M 134 

Lyon, Gary & Company 135 

Mabley & Carew Company 137 

McCreery & Company, James 136 

McElwain Company, W. H 295 

Mahon, W. D 358 

Majestic Manufacturing Co 137 

Manufacturers' Trust Company, The 306 

Manufacturing Company, A 138 

Marr Grocery Company, H. A 347 

Marshall Field & Company 230 

Maypole Dairy Company ■ . . 395 

Mechanicville Knitting Co 143 

Merchants Refrigerator Co 307 

Metropolitan Coal Co 331 

Metropolitan Life Insurance Co 143 

Miami Copper Co 332 

Michelin & Company 386 

Midvale Steel and Ordnance Co 230 

Miller Metal Works 307 

Milwaukee Gas Light Co 145 

Minneapolis Bedding Co 146 

Minneapolis, St. Paul & Sault Sainte Marie Ry. Co 231 



420 INDEX 

PAGE 

Morris & Company 233 

Morse Chain Company 308 

Motor Trades 351 

Mueller Manufacturing Company, H 296 

Muller Roger & Company 386 

Narrow Fabric Co 233 

Nash Company, A 308 

National Association of Window Glass Mf rs 343 

National Bank of Commerce in St. Louis 54 

National Biscuit Company 234 

National Cash Register Company 55 

National Cloak & Suit Co 234, 333 

National Lead Company 148 

National Paper Company 148 

Nelson Manufacturing Co., N. 236 

New Albany Veneering Co 57 

New England Confectionery Co 149 

New England Hardware Dealers' Association 347 

New Haven Gas Light Co 237 

New Jersey Zinc Co 150 

Newport Daily News 149 

New York Times 351 

Newton and Watertown Gas Light Co 57 

Noblesville Heat, Light and Power Co 58 

Norcross, 0. W 352 

Norriton Woolen Mills 58 

Northwestern General Trading Co 333 

Northwestern National Insurance Co 150 

Norwalk Tire and Rubber Co 239 

Ohmer Fare Register Co 151 

Oneida Community, Ltd 296 

Optical Company, An 333 

Orton & Steinbrenner Co 59 

Outlook Company 60 

Owl Drug Company 151 

Page Belting Company 334 

Palmer Lime and Cement Co 152 

Parke, Davis & Company 239 

Passaic Print Works 308 

Patton Paint Company 152 

Peace Dale Manufacturing Co 334 

Peck Company, B 152 

Pender Grocery Company, D 308 

Peninsular Paper Co 60 

Pennsylvania Engineering Co 153 

Percentage of Profits 24 

Perham, H. B 380 

Perkins, George W. 

Profit Sharing; or, The Worker's Fair Share 8 



INDEX 421 

PAGE 

Pettibone-Peabody Company 154 

Phelps Dodge Corporation 297 

Piat's 386 

Pickands, Mather & Company 240 

Pillsbury-Washburn Company, Flour Millers 335 

Pittsburgh Coal Company 241 

Pittsburg, Butler and Harmony Consolidated Ry. and Power Co. 242 

Pittsburgh Trust Co 61 

Plant Company, Thomas G. . 336 

Plymouth Cordage Co 155 

Potomac Savings Bank 155 

Practice and Theory 351 

Press Report 304 

Problems Involved 354 

Procter & Gamble Co. 243 

Production Bonus 188 

Profit Sharing, Definition of 22 

Proposed Plans . 345 

Public Service Corporation of New Jersey 246 

Pullman Company 156 

Pyrene Manufacturing Co 156 

Quinn, C. F 379 

Rand, McNally & Company 247 

Reed-Prentice Company . 156 

Reid & Hughes Co 298 

Reis & Company, Robert 347 

Republic Iron & Steel Co 247 

Rich & Brothers, M 306 

Richardson & Company, O. W 348 

Ringwalt Linoleum Works 337 

Robinson, E. S. & A., Ltd 395 

Rogers Peet Co 337 

Roos Brothers 157 

Rosenbaum Co 61 

Roycroft Shop 248 

Rumford Chemical Works 158 

St. Louis Shovel Co 338 

Salt Lake "Telegram" 306 

Samson Cordage Works 159 

San Diego Savings Bank 349 

Saugerties Manufacturing Co 338 

Scharrenberg, Paul 380 

Schiff, Mortimer L 360 

Schwab, Charles M 359 

Sears, Roebuck & Co 159 

Seattle Times 196 

Security Cement and Lime Co 161 

Seneca Falls Mfg. Co 161 

Seng Company 162 



422 INDEX 

PAGE 

Seward Trunk and Bag Co 163 

Shaft-Pierce Shoe Co 249 

Shepherd Construction Co 163 

Shuttleworth Brothers Co 165 

Simmons Company, R. F 62 

Simons Manufacturing Co., Ernest 165 

Simplex Wire Cable Co 63 

Simpson Company, Robert 166 

Skemp, J. C 378 

Smith and Sons, Alexander 167 

Solvay Process Co 168 

South Metropolitan Gas Co 392, 396 

South Norwalk Electric Works 169 

Special Distributions 74 

Spencer, F. C 355 

Spencer Wire Company 338 

Springfield Foundry Co 340 

Stambaugh-Thompson Co 64 

Standard Textile Products Co 299 

Starbuck & Company, E. D 169 

Star-Peerless Wall Paper Mills 170 

Steketee & Sons, Paul 171 

Stern & Sons, Bernhard 65 

Stetson Company, John B 172 

Stevens Company, Samuel 175 

Stock Ownership Plans 198 

Stone, Warren S 369 

Storrs Mica Company 66 

Studebaker Corporation 249 

Sullivan, J. W. 

Profit Sharing; Trade Unionism: Labor Co-Partnership. . . 404 

Sullivan, Jere L 376 

Sweet, Causey, Foster & Company 67 

Swift & Company 252 

Taylor, J. T. J., Ltd 394 

Taylor Dry Goods Co., John 176 

Thompson Sons & Company, John L 306 

Three-in-One Oil Co 176 

Tighe, M. F 373 

Title Guarantee and Trust Co 177 

Todd Shipyard Corporation 254 

Tracy Loan and Trust Co 178 

Trade Unions, Attitude of 368 

Turner Construction Co 179 

Tweedy Silk Mills, Inc 180 

Tyler Company, W. S 67 

Underwood Typewriter Co 308 

Union Mining Company 340 

Union Oil Company of California 68 



INDEX 423 

PAGE 

Union Savings Bank and Trust Co., of Cincinnati 69 

Union Switch & Signal Co 254 

United Paperboard Company 180 

United States Playing Card Co 181 

United States Printing and Lithograph Co 301 

United States Rubber Co 257 

United States Steel Corporation 258 

Volker & Company, William 302 

Voll, John A 372 

Vonnegut Hardware Company 181 

Ward Baking Company 341 

Warner Company, Charles 261 

Warner Hardware Company 70 

Washburn-Crosby Co 182 

Washington Railway and Electric Co 341 

Wayne Cut Glass Co . 342 

Wayne Knitting Mills 70 

Weinstock, Lubin & Company 183 

Weir Frog Company 197 

Western Wheeled Scraper Co 183 

Whitaker-Glessner Co 184 

Wilbur & Sons, H. 185 

Wildman Magazine and News Service . . 73 

Wilkes-Barre, "Times-Leader" 306 

Williams Brothers Co 343 

Williams Foundry & Machine Co 185 

Willys-Overland automobile plant 309 

Wilson, James 379 

Window Glass Manufacturing Co 343 

Winship, Boit & Company % 350 

Wire Wheel Corporation of America 185 

Wright & Potter Printing Co 344 

Wylie China Company, H. R 186 

Yale and Towne Manufacturing Co 186 

Young, Smyth, Field Company 302 

Youngstown Sheet & Tube Co 263 



Press of B. H. Tvrrel 
206-208 Fulton Street 
New York, X. Y., U. S. A. 

,336 



